An individual who wants to start a restaurant can make a wise move by opening their establishment, but owning a franchise can assist an owner by offering them the necessary expertise while providing ongoing support through the early stages of the learning process. Franchising is attractive to many business owners since it allows for a suitable means of owning a restaurant while limiting money, time, and risk.
All franchises share similar qualities, although some are more profitable than others. The concept of independent ownership and franchising overlaps. Example when it comes to location and a competent management team. On the other hand, independent restaurants and franchises differ significantly. So, by how many restaurants does it take to be a franchise? Let’s consider some details.
Franchise Restaurant Defined
A franchise restaurant is a brand purchased by an investor or franchisee with the intent of using it. More often, the question is, how many restaurants does it take to be a franchise? The franchisee is responsible for managing and running the restaurant, including the day-to-day operations. The licensor (franchisor) provides marketing and operational support and a proven restaurant idea to obtain a license. There are apparent differences between franchising and non-franchising businesses.
Franchises are frequently started as independent mom-and-pop restaurants, and only later are they expanded to other sites and new investors. Without an established recipe, the restaurant brand cannot accept franchisees—the growth of the brand and the profitability of the franchiser increase with the opening of new sites. Additionally, franchisees can profit from the franchising model while also reducing their risk.
While a non-franchise may have dozens of sites, franchisees can have thousands of locations. More than 36,000 McDonald’s restaurants are found in over 100 countries worldwide as of 2020. Because customers already know and frequently trust a brand, it is pretty easy to market. In addition, innovative expansion is a critical component of franchising brand management.
When you’re a franchisee, you’re required to pay a fee to utilize the brand. Franchise fees can vary, depending on business size, whether or not an owner has invested in several locations, and the franchise’s age. The franchisee is also responsible for the ongoing expenses of running the restaurant, such as cleaning and staff expenditures. He may need to sign agreements mandating future upgrades or modifications.
Franchise restaurants are the most commonly well-known brands that operate in numerous countries or regions. The franchisor typically handles the bulk of marketing and advertising efforts. At the same time, franchisees can have a say in marketing strategies and frequently help contribute to the total marketing budget. In addition to the corporate owner, market research is also the responsibility of the company. This policy serves the purpose of saving the franchisee money while simultaneously gaining customers. However, because the franchisee has no authority over the brand, he has no say in it.
The food from a franchise tends to be the same from location to location. The corporation owns the menu and recipes, and the corporate owner must authorize any food vendors for consistency. This situation applies in several circumstances where the franchiser demands the usage of its products. Market research may also be done to test new recipes in the corporate kitchen.
When people choose to be franchisees, they like benefiting from an ongoing support structure that doesn’t exist when opening a business from scratch. Many franchise businesses offer in-house loans, training programs, and all sorts of support services to help with community engagement, tech failures, and even general operational issues.
Benefits of a Franchise
Even by how many restaurants does it take to be a franchise, you should start with the design step. It then follows if you have a proven restaurant concept with a solid business structure. If you have been thinking of McDonald’s, Panera Bread, Applebee’s, or Halal Guys, you’re close. You can either open additional places or do nothing; there isn’t a third option. Doing this will help you grow your restaurant’s brand, dishes, and methods. Restaurant owners franchise their businesses because the popularity of franchises grows exponentially. More or less, it’s all about money, time, people, and place.
Grow your brand by reducing investment
While you also have less capital investment, you can continue to expand your restaurants. It’s prevalent for individuals who join a franchise to pay a franchise fee to join your brand. The franchisee will cover the cost of the restaurant construction and bear financial responsibility for the facility. It is explained that a franchise system benefits from having franchisees contribute their capital since it reduces the total expenses of the system while allowing franchisees to have a financial stake in it.
For exponential growth
It is impossible to establish corporate restaurants with just capital, people resources, and, in many situations, location. Even though your brand’s growth rate is high when you franchise, your overall growth may be broader because you now operate in other markets. The more franchisors that are ramped up, the more locations they can open. On the lower end, in the range of 20 to 50 and 100 to over 200 on the higher end. Einbinder & Dunn claims: “Franchising restaurant concepts allows for fast growth. If you expand your brand through franchising, the investment in new outlets comes from franchisees. It is critically important to remember that when you choose to go down the franchise route, you will likely be entering new markets, which may present a significant departure from your previous business.”
A network of franchisees is built to expedite this quick expansion, all simultaneously expanding in various locations. Once a new restaurant opens, additional people might come on board to create their restaurants in your franchise system. That is the process on how many restaurants does it take to be a franchise.
There is no definite answer as to how many restaurants does it take to be a franchise. But, here are some of the things you should consider. If you plan to launch your own business and start running a franchise, it can be a great way to get your feet wet in the business world. However, before you commit to running a franchise, make sure you know why you’re doing it, what you’ll be getting into, who you’ll be working with, and how you plan to exit. When you better understand the answers to these questions, your odds of finding the perfect franchise and company will be better.