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The Pros and Cons of Owning a Food Franchise

The Pros and Cons of Owning a Food Franchise

By FranchiseKing, Guest Blogger
Published: October 22, 2018

When it comes to deciding on the type of franchise business you want to own, there are several factors to consider.

The business location, how many people you’ll employ, and  more.

And once you’ve decided on a franchise business you think you’d like to own and operate, you’ll have to weigh the positives and the negatives.

If you have decided on a food franchise, there are some unique considerations for this type of business.

 

The Positive Side of Food Franchise Ownership

Here are some of the pros of owning a food franchise.

1. As long as you have a steady stream of customers patronizing your restaurant or food store, revenue tends to be pretty high.

Of course it depends on the franchise, but when you think about it, it’s tough to buy breakfast or lunch for less than $8-$10 in most food-service establishments with dinners are usually costing even more. As long as you have a steady stream of customers patronizing your restaurant on a consistent basis, your revenue figures will be fine.

2. New food-service establishments create a lot of local buzz.

Most people know when a new restaurant opens in town, especially if the Grand Opening is a memorable one.

When you buy a franchise, marketing assistance is included in the upfront and ongoing fees.

Good franchisors know how to put on a strong Grand Opening, and if yours goes well, you won’t have to wait long for customers to line up to try (and purchase) your food.

3. Food-service is fast-paced.

It’s quite an experience to own and operate a busy food-service business. Especially when your take-out phones are ringing off the hook, people are waiting in line to order, and your cash register is overflowing with cash.

If you like working in a high-energy, fast-paced environment, you’re going to love owning a food franchise. Don’t count on there being a dull moment.

4. Real Estate assistance is provided.

Location can make or break the success of a food franchise. You want to have the best one possible. That’s where a franchisor with a good real estate expert is key. To be exact, immediately after your franchise agreement is signed, the Real Estate person at franchise headquarters gets to work.

She leverages her connections with the nation’s leading Commercial Real Estate companies to help secure the best location possible for your new business. That alone gives you a huge advantage over an independent businessperson (without Commercial Real Estate connections) who’s trying to secure a location for his restaurant.

 

The negative side of Food Franchise Ownership 

1.  Food franchises have high employee turnover

If you become the owner of a food franchise, plan on going through a lot of employees. Turnover rates in the hospitality industry* hover around 70 percent.

That means you’ll be spending a lot of time on employee training, new-hire paperwork, and shift-filling. (Unless you have a manager who can do this for you.

2. Food franchises require a physical location

Having a location means a couple of things.

First of all, compared to an office-based or home-based franchise, your expenses go up, as you’ll be paying for things like the build-out, signage, rent, utilities, and more.

Secondly, you’ll have to sign a multi-year commercial lease. These leases tend to be complicated and are extremely landlord-friendly.

Tip: before you sign a lease, hire an attorney to go over it with you. And make sure your attorney has a lot of experience with commercial leases.

3. Food franchise ownership requires long hours

In addition to the long hours, food franchise owners need to have a lot of energy, especially during peak times, where you’ll have to pitch-in where needed. Whether it’s cleaning tables, helping prepare the food, or manning the phones, you’ll be smack-dab in the middle of the chaos that all busy food franchises experience.

In conclusion, owning a food franchise can be a good way to go for someone who enjoys a busy, high-energy environment that includes a good number of employees.

Furthermore, if you can afford to own several units of a high-performing food franchise, your business can end up being quite lucrative.

*Non-U.S. Government link 

 

 

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.