I recently worked with a restaurateur who wanted to franchise his restaurant. As we sat, he explained to me the reasons why he wanted to expand. He mentioned his reviews were great and his restaurant reputation was positive and well known in the city. He felt it was time to move into the next phase. I consulted with him
for several days, diligently performing my research. Everything he told me was accurate, however I had yet to see his financials. Like many restaurant owners, when I finally saw them, they were a mess. Needless to say, he delayed his plans to franchise and concentrated more on the business aspect of running a restaurant before he revisit the idea of franchising again.
Seek an outside perspective
The restaurant owner mentioned above put the cart before the horse. Potential investors or franchise candidates are seeking to put their hard earned money into a well organized investment. What I admired most was that the restaurant owner had the wherewithal to seek guidance. In his case, simply having great food and drinks is not enough to expand into a franchise. Seek assistance from a experienced consultant or someone who has experience in franchising that will help guide you in the process.
Is your restaurant replicable
Can you duplicate your restaurant or have you opened multiple locations? Do you have systems in place and are they transferable and easy to implement? Are you prepared to open your books to an external auditor? These are questions you should ask yourself. When you buy a new TV, it will have instructions on how to operate it. That's what a franchise candidate will expect from you. While pondering the idea of franchising, think of what you see in other franchises. Your restaurant color scheme, furniture, layout, menu, systems and branding are all important factors to acquiring a potential franchisee. I like to tell new startup owners to think forward or expansion before laying your first brick. It can be very costly to revamp a restaurant to prepare them for franchising.
How prepared are you
Do you have a support team in place? It's a absolute must that you have competent professionals that adds value to your business. Do they know and understand your vision and will work passionately to help you attain that vision. Surround yourself with high achievers that can deliver results. Franchisee's who purchase franchise's are purchasing a system and business model that has the potential to yield a good return on investment. A model that has your vision and brand stamped all over it. Are you prepared for the cost to franchise? Franchising isn't cheap! From legal to advertising, you'll need to budget for this line item. The cost range for franchise advertising companies, but you can expect to spend $35-85 a lead.
Now that you are thinking about about franchising, it's important to establish more mutually benefiting partnerships. You may have already developed some relationships with local purveyors for your restaurant. Some of your existing partnerships may not be able to deliver the same services to a franchisee that's not in their region. Develop relationships and start inquiring about services that fit your business model and expectations.
Can you let go
You can't step into every franchise and run their business for them. Your control of the direction of the franchise stops at your franchise agreements and operations manuals. That's why it's important to perform due diligence on the potential franchisee. Remember, it's your brand and your vision that's at stake. A good franchisee is a partner. That means you expect them to operate the business the way the model is intended. Don't except the money without understanding who you are trusting your brand to.