3 Reasons to Franchise a Restaurant Concept

Supposing your restaurant has been successful and you have a solid expansion plan, you’d be looking to open additional locations. Franchising a restaurant involves allowing a prospective franchisee the right to use your brand name or trademark, recipes, and operating procedures–and is one good way to expand.

The technicalities of establishing a successful restaurant franchise can be frustrating, and it requires the expertise of a franchise lawyer. A franchise lawyer can help franchisors and buyers with various issues, such as drafting a balanced franchise agreement, legal advice & representation, among others. So, what are some of the reasons to franchise a restaurant concept?

3 Reasons to Franchise a Restaurant Concept

1. Provides Expansion Financing

Did you know you can expand your business without any capital investment? Franchising is the answer as it involves getting capital in the form of a franchise fee paid by a buyer or franchisee to access your brand as a business partner. The franchise fee will cater to the building of the new unit (restaurant) and all the finances required by the new location.

Building and establishing new company units can be costly and need significant funds that a franchisor might lack. The franchise fee not only facilitates expansion eliminates the franchisor’s financial investment. The only costs are associated with fulfilling the legal requirements like drafting an FDD and franchise agreement. Still, a significantly less costly process than expanding on your own.

2. Exponential Growth

Establishing a restaurant franchise can be limited by, among other things, capital, workforce, geography, or location, but when you franchise, the brand is likely to grow faster. In multiple markets, successful franchisors can open multiple units annually. Franchising allows a brand to grow in multiple markets simultaneously.

Rapid expansion can be catalyzed by onboarding many franchisees to build new units simultaneously in different locations or markets. When a new branch opens, it captures the attention of more prospective investors who might consider buying into your brand.

However, a word of caution should be stated that the franchisor needs to select highly qualified franchisees to represent their brand because if franchises start to fail, it looks terrible on the whole brand.

3. Owners vs. Employees

The most challenging aspects of operating a restaurant are; recruiting, training, and maintaining a workforce. Franchising helps a franchisor transfer those challenges to the franchisee who becomes the boss at the new location. The franchisee becomes the owner and oversees operations of a new unit, unlike a corporate employee–meaning they’ll be more hard-working than employees.

Additionally, a franchisee will be more committed to the business and can’t just quit thanks to their vested business interests. The franchise fee paid means that an investor’s money is at stake and their contractual obligations under the franchise agreement.

A franchisee whose goals align with the franchisor’s mission and are willing to invest in the business’s success is critical for growth.

A restaurant franchise concept can be influenced by many reasons, including shortage of capital, time, workforce, and market. However, it should be noted that franchising does pose unique challenges. Various factors should be considered before establishing a restaurant franchise, such as setup costs, legal compliance, marketing, recruitment, among others.