If you were to visit a local college campus and seek out the advice from the business department faculty about starting up a company of your own, they might offer up statistics to help you understand the difficulty of finding success in the business world. They may cite popular statistic that half of all startups fail the first year they are open, including franchises. Keep in mind, however, that this information is meant to encourage you to be careful as you make plans to start a new venture.
A popular business model to buy into is a restaurant franchise. It can offer all the benefits of a functional business plan, operational procedures, and the support of a corporate office to stand behind you. Additionally, there are benefits such as the buying power that franchisees can have when it comes to stocking their shelves with food and other items that need to be kept on hand. Buying a restaurant franchise can be a good move for someone who wants to enter the world of entrepreneurism without all the risk of starting from scratch.
Buying a Business Plan
One of the major advantages to purchasing a restaurant franchise is that the corporate office has developed a successful business plan that you can benefit from. Rather than starting from scratch and trying to test the market yourself to determine success, you can benefit from a proven business model that has a national name. While a franchise fee would be your responsibility to pay to get you up and running, and once you opened your doors to the public you would be required to pay royalties, many consider these fees trivial in comparison to the benefits the franchisor offers. The franchise fee would provide you with the following:
- A business model to work from
- Support from the corporate office throughout the duration of your franchise agreement
- Local, state, and oftentimes national brand name recognition
- A training program for directors, officers, and restaurant managers
- Support during construction
- Grand opening assistance
- Staff member training
Once the store is up and running, you would likely have to pay royalties for every item that was purchased in your restaurant. Sometimes the payment schedule is monthly, but usually the corporate office automatically drafts their royalty fees from your business checking account on a weekly basis. Royalty payments are collected for the following reasons:
- Operational procedures that are constantly evolving
- Continued use of corporate intellectual property
- Continued use of corporate recipes
- Local and national advertising campaign participation
Buying Clearly Defined Operating Procedures
In addition to buying a tested business model, a franchise also provides franchisees with clearly defined operating procedures. In the beginning, doing the bare minimum to keep things running can be a challenge. It’s important to have operating procedures in place so a newly trained staff can start working in the most effective way possible. A lot of preparation has to be done before the doors can open for business each day and operational procedures will help get you open and stay focused throughout the day. It might include a checklist with the following items:
- Walk through the dry storage areas to see if enough products are on hand.
- Walk through the freezers and refrigerators to see if enough products are on hand.
- Start preparing vegetables, meats, cheeses, sauces, teas, coffee, and other items that need to be available when the restaurant opens each day.
- Batch the credit card processors and prepare a deposit to take to the bank.
- Report sales to the corporate office.
- Ensure the restaurant is clean and ready for customers to walk in.
- Assess what food items you are running low on and prepare replacements.
- Wipe down food prep surfaces.
- Wash dishes.
- Clean tables and floors in the dining area.
- Empty the garbage.
- Run reports to track sales for the day.
- Prepare and store foods for the following business day.
- Empty cash register and drop money in restaurant safe.
- Clean dining area, restrooms, and food prep stations.
- Wash dishes.
- Print reports from cash registers that have tracked sales for the day.
The Advantages of Buying A Restaurant Franchise
If you’re considering purchasing starting a food establishment, you may want to consider buying a franchise first. While there is a franchise fee and royalty fees that you would be responsible for paying, you would benefit from local, state, and even national brand recognition. You would also have a clearly defined business model to work from with operational procedures that you could start implementing on day one. There are many advantages to buying a franchise, but perhaps the operational soundness, brand recognition, and corporate support are the most beneficial.