If you are a restaurant owner, you probably already know that there are a couple of different models for business growth. In the restaurant space, franchising tends to be one of the more popular models. From fast food joints to fine dining experiences, a lot of our favorite restaurants utilize the franchise model. But, what do you need to know before you franchise your restaurant?
Let’s be honest – franchising can be scary. Deciding to franchise your restaurant is a big decision that takes a lot of time, money, and commitment. As a restaurant owner, there are a lot of unknown elements that might keep you from entering the franchise space. Some people may be uneasy about the prospect of giving up control over a business or brand they’ve worked so hard to build. Some may be worried that they will be unable to run a successful franchise system. Others might just be afraid to step into a field they are unfamiliar with.
In today’s blog post, I’m covering the 3 things you should know before you franchise your restaurant in order to ease some of these fears.
3 Things to Know before You Franchise Your Restaurant:
- Working with a knowledgeable attorney is invaluable.
- Clearly defining your processes and procedures will make franchising easier.
- Operating multiple locations before you franchise may help you work out problems with your business model.
Number 1: Working with a knowledgeable attorney is invaluable.
I cannot overstate the value of working with a knowledgeable attorney when you want to franchise your restaurant. The benefits of working with an attorney come from both the knowledge the attorney has of the legal requirements of a franchise system and from the attorney’s own experiences within the franchise space.
The knowledge attorneys have of legal requirements is a fairly obvious benefit of working with an attorney. But, not every attorney has knowledge about the franchise space. For example, franchisors are required to complete various registrations and legal documents before they can connect with franchisees. Being able to ensure that your new franchise is operating legally is one of the reasons that working with an attorney who has familiarity with franchise systems is so important.
Working with an attorney who has experience in the franchise space is also beneficial. Attorneys who practice in this area will be better equipped to help you avoid common pitfalls or mistakes based on their prior experiences. They will also be able to provide you with insights and feedback on things like whether you are ready to franchise your business and how to get your franchise off on the right foot.
So, if you are seriously considering turning your restaurant into a franchise, I strongly encourage you to talk to a knowledgeable attorney who you trust. Building that relationship can be an important first step towards running a successful franchise.
Number 2: Clearly defining your processes and procedures will make franchising easier.
In order to successfully use the franchise business model, you have to have clearly defined processes and procedures. After all, part of your responsibility as a franchisor is going to be teaching new franchisees how to operate their locations. Unfortunately, there are a lot of restaurant owners who sincerely believe that they have clearly defined processes and procedures when the reality is that they don’t. So, how do you know if you fall into this category?
First, take a hard look at your role in the business. Could your business operate without you? If the answer is no, you are probably not ready to franchise your business because you haven’t created processes and procedures that detail what to do when you aren’t there. It is important to remember that when you become a franchisor, your role within the business will change dramatically. You will no longer be in charge of the day-to-day activities of your location. Make sure that you have processes and procedures in place to make this transition as painless as possible.
Another indication that you do not have clear processes and procedures is a high staff turnover rate. If you are constantly having to fill staffing positions, especially managerial positions within your restaurant, take a hard look at your processes and procedures. In this situation, it is a real possibility that your employees are leaving due to a frustration with the way things are done. In general, employees like to have clear expectations and guidelines. They also like to know that what they are doing matters and that they are doing their job correctly. Your processes and procedures should provide this information to your employees in a concise and easily understood manner.
In order to facilitate your transition into the franchise space, make sure you have clearly defined your processes and procedures. In this vein, take some time to look over (or create) your operations manual and ensure that adequate attention is given to every aspect of your business. Doing this will make franchising your restaurant easier in the long run.
Number 3: Operating multiple locations before you franchise may help you work out problems with your business model.
Lastly, operating more than one location may help you work out any problems within your business model. In general, I believe operating multiple locations before franchising your restaurant is essential to helping you figure out what works well and what doesn’t.
If you only have one location, there is virtually no way for you to know whether other locations will work well. This can become problematic when you are drafting the documents that will eventually get you into the franchise space. How do you know what the size parameters for a new building should be? How are you going to know which geographic features help your business? How will you know how to replicate any of the other factors that may have helped the success of your restaurant up until this point? Operating multiple locations is one of the best ways to figure these details out.
Furthermore, if you only operate one location, how do you know that your business model will be profitable at other locations? It’s important to have an understanding of your profit margins before you franchise so that you can set reasonable expectations for fees or other expenses that you will require franchisees to pay. Opening multiple locations is one of the best ways to figure out these kinds of details.
As a franchisor, you will have to figure out all of these details, as well as many others. Each time you open a new location, you learn about problems that may arise and how to correct them. In the end, this knowledge and experience makes you a better franchisor because you’ve been able to work out a number of problems beforehand.
In conclusion, there are many things to consider before making the decision to enter the franchise space as a restaurant owner. As always, I hope you found this information beneficial. If you would like more information on this topic, please feel free to check out my free e-book, Things to Know Before You Franchise, which can be found on the right-hand sidebar of this website, or check out our blog and podcast. If you are ready to speak with attorneys who are knowledgeable and experienced in franchise-related matters, visit our Contact Us page to get in touch and figure out how our office can help you achieve you franchise goals.