The Food & Beverage Business
Helping Entrepreneurs Succeed....
“I’ve been getting enquiries to franchise my restaurant. I’m keen, but not sure how to go about it.”
Nowadays, restaurateurs with one or two outlets, newly launched or old, already successful or yet to break-even, often get approached for a franchise. It is indeed flattering! It tells the owner that his/her restaurant is clone-worthy, investment-worthy and can earn a good return. But jumping into it, without planning the depth & breath of a franchise association, puts his hard earned reputation at stake, and dilutes the very essence of his growth plan.
So here’s how you can get franchise-ready...
A restaurateur must first honestly look inside & out to assess the brand’s clone-worthiness:
Move forward only once these are fulfilled.
“McDonald’s: Behind the Arches” points out how prioritizing the franchisee’s profitability over their own, makes for a strong foundation. This approach built not just their franchisees’ trust, but led to the franchisees themselves becoming McDonald’s best brand ambassadors. This is the core of the franchisor-franchisee relationship.
A franchisor must first be aware of existing problems within his business (particularly if they are cultural or system related). He must ideally resolve these problems before franchising, or else with each new outlet his problems will multiply.
He must create and share a business plan with his franchisee which covers:
... basically everything he would think about had it been his own business.
Franchisees who’d like to invest in the business’ success may be:
Whichever way a franchisee is found, his integrity and attitude come first. Only then will his ability to invest time & money, and his prior experience in the industry be of value.
Legal counsel is necessary to create an agreement that protects the interests of both parties. An advocate with franchising experience is ideal. Overall the agreement should cover:
Training: A franchisor inducts a franchisee by training him on how to run the business commercially, technically and as a hospitable host. This is usually done by getting the franchisee to spend some hands-on time at the franchisor’s restaurant as well some specific discussions and training programs for the franchisee and his team.
Manuals: Written manuals to be shared usually touch upon the brand philosophies, organizational hierarchy, contact personnel for assistance, standard operating procedures (in terms of purchase, storage and the preparation of food and its service), human resource policies, and generally the quality & standards expected in every aspect of the business.
Management Information: Sharing a dashboard of Management Information with the franchisee helps both parties monitor the business performance continually and helps take decisions and corrective action.
Purchase: The franchisor must identify which existing vendors the franchisee will have to purchase from centrally, and which he may purchase from himself locally. For example a franchisor may insist on the franchisee buying a certain brand of equipment, but may be open to the franchisee sourcing say vegetables, himself.
Outlet Design: Preparing an outlet design docket before a franchisee signs up his outlet, rather than after, saves a lot of time & money. Though each specific layout would eventually need to be custom-planned, putting down the design details and broad quantities of furniture, floor type, etc. must be done in advance.
Marketing: Simply taking 2% or more of a franchisee’s sales for this, particularly if a franchisor has just one or two outlets, is meaningless. It is more prudent to compile a list of sales initiatives you propose for the franchisee’s business and work out their costs. Sharing this plan with the franchisee and letting him know that he needs to foot the entire amount to build sales at his own outlet, is a more realistic and transparent method.
There are a host of consultants and agencies in the marketplace who can help you with each or many of these areas. You can choose which areas you can cover yourself and in which areas you will need help. Regardless, it is you who must drive the overall process and orientation of your franchising endeavour.