How do I sell My Restaurant Franchise?
If you want to own your own restaurant but are hesitant about the initial capital investment, a fast-growing restaurant franchise may be the answer.
This type of business offers many benefits to prospective owners: training and support from a successful brand, lower start-up costs, and no need for equipment leasing or purchase. And because franchisees are allowed to operate their restaurants with relatively little involvement from corporate headquarters, it’s possible for an entrepreneurial type who thrives on self-sufficiency and independence to thrive as part of this system.
Below is a list of criteria that will help you determine if this is the right choice for your future—and what questions you should ask before deciding anything final.
1. The Franchise Fee
One of the most important questions you can ask when looking for a restaurant franchise is about fees. Just how much money do you need to shell out before you even open your doors?
Many restaurateurs who were new to the industry and failed because they couldn’t understand that this is an ongoing, never-ending expense. It is not like buying a car where you pay once and it’s done. You have to pay each year to keep your business going and it can be very costly if these payments are not met or missed.
Some franchises require you to pay a franchise fee upon taking over the operation. The majority, however, allow you to pay a franchise fee once your business is up and running.
2. The Franchise Fee History
You want to be sure that you are getting the most up-to-date information available when considering whether or not this is the right franchise opportunity for you. Ask how often their fee increases and how much they have changed over time.
3. The Sales History
This information can really help you judge whether or not this is the right model for operating a profitable business. Having this information on record helps you in your decision-making, especially when it comes time to make an offer. Enquire about their average sales per unit per week and their average sales growth over time.
4. The Real Estate History
This is another important aspect to consider before investing in a franchise location. Ask about how many times the real estate has changed hands and how often that happens with their franchises. Also, find out what kind of business model works best with their brand and if it is something that would work well for you and your prospective location.
5. The History of Franchising
There are a lot of great franchisors out there, but they aren’t perfect. There have been a lot of changes and advancements made to the industry over time and you want to know what those are so that you can make an informed decision. Ask about the history of their business model and whether or not they have been able to maintain their growth level over the past few years.
6. The Company Size
When researching potential franchise opportunities, it is important to look at how big the corporation is that is making this investment in you as well as whether or not it will be just enough for your needs. If they are a large corporation with multiple locations, they are likely to be more secure than a franchise that has just started up.
7. The Company History
The time period in which the business was founded is something you should also consider before investing in their franchise. Ask about the company’s history and what kind of growth has been experienced over time. Setting up an appointment for a tour at their corporate office will also give you an idea about how successful this company is. Good customer service can be a great indicator of success as well as an experienced staff that have worked there for several years. A longer tenure means more experience and improved customer satisfaction.
8. The Company Background
Having a company background check done on management or corporate staff can also give you an idea of what you’re working with. Are they experienced? Is their emphasis always on the franchisee and growing their business, or are they focused more on bringing in new franchisees at any price and risk? You want to go into this knowing as much about your potential partners as possible.
9. Competitiveness of the Market
There are advantages and disadvantages to every market, no matter how large or small it is. If this franchise has a strong presence in your market, then there may be some serious competition that could hurt your bottom line. Ask about the franchise’s market share and the overall market share of similar businesses in your area.
10. Number of Units
The more franchisees there are in a particular market, the greater that company’s buying power and purchasing power will be. This can have a big impact on your business, as you have to keep up with competitors who may purchase supplies in bulk at lower prices than you can get them for.
11. Number of Franchises Planned
Some franchisors plan to expand over time by adding new units to their system at a certain rate. This can be a good thing if franchise supply agreements and development costs are going down as you add more units. If this is the case, then this investment could increase in value as time goes on.
12. Percentage of Franchised Locations
Discovering the percentage of open franchise locations across the country gives you an idea about how big a slice of the pie is left for you to take over or expand your business. You want to go into this knowing that there are several other restaurants doing well, so your chances of success will be much better. This can also help you determine if it is a good idea to open a second location or go with different model if the franchise has already saturated their market.
13. Percentage of Franchised Units Currently Operated by the Franchise
Some franchisors will tell you that all franchise locations are pure and authentic. This may be true, but it also means that all franchises in this model will experience constant growth. This is a less stable business model than if you were to open your own business where there was some pressure on sales in addition to the ongoing cost of running your business. Ask these questions about how many different franchises currently operate their stores in the same neighborhood as yours and how quickly they are growing. There is a real benefit to knowing if you are competing against another well-established local business that has been in business for several years already.
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Conclusion
The information you gather here will help you determine if a particular franchise may be a good fit for your business or whether you need to look at other options. Being well-informed about the way franchising works and equipping yourself with the right resources can really make all the difference.
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