Restaurant Franchise or Independent Business

 

There are just as many good reasons to buy a franchise as there are not to. Whether or not you start your own restaurant or look into buying a restaurant franchise will depend on the type of person you are, how independent you want to be and how much experience you have in running a business.

Advantages

One of the biggest advantages of buying into a restaurant franchise is name recognition. The public will already know the reputation of the brand, the quality of the food and exactly what to expect. Customers who know what to expect before they walk in the door are rarely disappointed and will keep returning. A franchise often provides their favorite type of cuisine or a best-loved dish, prepared exactly the same way as it always is. It provides a consistent experience.

If you don’t have extensive business experience and marketing isn’t your strong point then you may want to consider a franchise. It will offer you a proven, successful business model and your advertising is already conceived and executed for you. You have support from the corporate office and can consult with them on any problems that you may encounter.

With a franchise, you will be introduced to effective systems for running a restaurant via operating manuals and training sessions. You will also be given recipes that have proven to be popular with customers as well as instructions on their preparation and presentation.

By buying into a restaurant franchise you may also get expert guidance on selecting a location and possibly even lease negotiation.

The collective buying power of the corporation also means you may have lower prices and thus lower overhead costs. It can also be easier to recruit staff since the workforce is familiar with the name and knows what to expect.

There are a lot of reasons to buy a franchise and that is why they are so popular. But there are also drawbacks that you must consider.

Disadvantages

Franchises have a certain business model that you must adhere to. You are presented with a restaurant concept that has a certain menu, decor, floor plan, procedures and set of rules. If you would like to offer something a little different from the menu or change a recipe then you’re out of luck. Franchises depend on consistency, not creativity and you will not have any flexibility when it comes to your own ideas about how to develop your restaurant.

You will have to share your financial information with the franchiser and pay royalties on a regular basis, as well as the initial franchise fee. You will get support in advertising and day to day operations but you are paying for this privilege through your franchise fees. Royalties vary with each franchise but they can represent a substantial portion of your profits. A franchise also usually has higher startup costs than an independent business, often making the franchise model inaccessible to the average first-time business owner.

While you do have field support from the corporate office you can become vulnerable if the franchise fails, leaving you out in the cold. If you start your own restaurant then you may have a tougher time in the beginning without expert support but in the long run you will have more freedom and probably more profit potential.

Buying a franchise also means you have an immovable wage scale and incentive program. You might find a real gem in one of your wait staff or someone you think would do well if promoted. Better check out those personnel rules though, because the franchise may have schedules and requirements that don’t suit your needs. A truly motivated and superior server may not be able to be rewarded in the same way as a server that performs below your standards.

Think carefully and do your homework before buying a franchise. It can be the best move of your life or turn into a real headache and you can read about the negative franchise experiences of many people on the Internet. One common complaint is that the franchise has allowed too many restaurants to open within a small area. So make sure that you check out the exclusivity of your trading area before going ahead.

If you do take the franchise road then you must read the franchise agreement carefully and seek legal advice if necessary. Make sure that the agreement gives you a good exit option in case things go bad and you want to pull out of the deal.

Try to get some accurate data on the failure rate of the restaurant brand that you have in mind. This information may not be reliable if it is coming from the franchisor so you may have to find a way to dig a little deeper.

Starting a restaurant does not have to be difficult. If you take the time to get a little experience and do some thorough research it should be no problem for you to take the independent route. A franchise may seem like the easy option in the beginning but if you put in the effort and develop your own brand and business model you should see greater rewards in the long run.