The Pros & Cons of a Restaurant Franchise

The business world is one of constant testing and taking risks. For a new business, there is never the certainty of making profits and that is taking into account the business plan you spent hours crafting and the invaluable hard work. Even with all of that and if everything clicks it can take a really long time to be successful.

What if you had the option of starting a business that skipped a lot of that journey? One where you had a guaranteed built reputation and a good setting to start from. Would you look at this as too good to be true or jump right onto this offer?

These are the things that you will be thinking about in the back of your mind when considering buying and investing into a franchise restaurant. You could easily get caught up in the positives at the beginning that comes with people coming through the door as they already know who you are. It’s very easy to forget about the hard work associated with making a business work, good reputation or not. So, if you’re not sure about taking on a franchise restaurant, let us weigh up the pro and cons of a restaurant franchise:

Pro’s

1.     Not having to create a whole new brand

When starting a new business, a lot of time has to go into the creation of the concept. This could take weeks, months, or even years to get perfect before launching a project. The owner of a business has to be creative and be able to spot a gap in the market for where their concept can fit in. All of this comes before considering things like what customers you want to attract, the impact on the local area, menu design, costs of production and building, marketing, and customer service.

These are all examples of things you won’t need to worry about when buying into a restaurant franchise. Everything is already set up and proven to work across multiple locations already. You’re basically starting off 2 or 3 steps ahead of where you would be if you came up with a completely new concept altogether (and skipping the bumps that come along the road).

2.     Reputation sticks

“You don’t get a second chance to make a first impression”, this quote is something that we almost always connotate with negative thoughts. In this case, we’re actually using it as a positive. Customers won’t care if you are a corporate or franchise site, if they love the brand, they will love you equally. This allows you to appeal to customers already who may have experienced the franchise in another location who can tell friends and family about how good it is and already you have people who know about your business from the off.

When comparing this to a new brand, you have to hope that people come into your restaurant, enjoy the food, experience good customer service, enjoy the experience as a whole and then want to tell people about it. Skipping that initial stage can give you a big push for your new site.

3.     In-depth Training Provided

When taking on a franchise restaurant, you can expect a lot of support from the franchisor. The whole point of a franchise is to expand a business, so the franchisor will be keen to help train you in the ways of the business and give you all the help you may need. Franchisee training is very detailed and can cover everything from the day-to-day running of a brand to making it a real success.

These training systems may include anything from starting systems and manuals, establishing and meeting brand standards, marketing support, quality control, equipment cost and more. A franchisor will do this as it not only sets you up to succeed but also leads to customer satisfaction across all locations. Essentially, everybody gets trained to the same standard and with that everybody benefits from it.

4.     Start-up Financing

Getting a loan for a new business can be tricky. Often, entrepreneurs will have to provide lengthy, detailed data regarding their bank history and professional background. Although the same is mostly required from a franchisee, there is a higher chance of all funding being approved due to the existing knowledge of the franchise’s product or service.

Cons

1.     Not a lot of independence

The franchiser has spent years building their brand, expanding as much as possible, and now offers in-depth training to franchisees as well as setting them up with the correct supply chain, construction managers and more. With that being said, it’s a safe bet that they’re going to want things done their way. Your job is to make that particular restaurant a success (and consequently the brand) without changing what the brand itself does. This may appeal to some franchisees but for more creative people who would like to experiment this can be a downside to a franchise restaurant.

2.     High employee turnover rate

One of the most challenging aspects of quick-service restaurants, high employee turnover. There are many reasons for this, most employees are required for long, inflexible hours that are really quick-paced and don’t offer the highest payments. Not to forget that often employees are young people in their first employment or often students who are only available for certain periods of a year and often only stay for 12-18 months.

Keeping employees committed to working and training them with the skills they need will be challenging and will likely see you recruiting, training and trying to retain staff on a regular basis. This can be time-consuming and costly.

3.     Dependency on the other franchisees

This con is arguably the worst of those in this list as it is completely out of your control. As you are limited in independence from your franchisor you depend heavily on the brand’s reputation and can’t get away from any issues that the brand may have even if its nothing to do with your branch.

If other franchisees are performing badly and offering a poor experience to consumers this can affect the brand’s reputation and hit you in the long run. If a customer visits a branch on the other end of the country and has a bad experience, do you think they will blame just that branch or the brand as a whole?

In summary, taking into account the pro and cons of a franchise restaurant it comes down to one thing, how do you feel about it? If you’re a creative person who doesn’t mind taking huge risks, honestly, franchising just might not be for you. If you’re a person who is intrigued by entrepreneurship and are seeking a lower-cost, lower-risk opportunity then franchising sounds like it may be the perfect opportunity for you. If you’re stuck in the middle and still not sure, why not take a look through the rest of my website to learn more about what I can offer, contact me to see how you can get started in franchising.