RESTAURANT FRANCHISING: WHAT TO KNOW WHEN INVESTING IN AN EATERY

Buying a franchise can make your dream of owning a restaurant a reality. Find out more about restaurant franchising and what you should know before you begin.

WHY RESTAURANTS?

More than almost any other type of business, restaurant franchising prevails because everyone has to eat! The average American eats outside of home 4 times per week, making restaurant franchise ownership a consistent, sustainable business. Even during the pandemic, when other industries suffered or screeched to a halt entirely, franchise restaurants had the means and ability to sustain business through use of digital engagement, 3rd party delivery apps, and other ways to stay connected to customers and serve their food.

Franchising restaurants serves to produce community hubs, places where friends and families gather and share meaningful experiences over delicious meals. While the industry is broad and varied, established brands with a loyal customer base can present the perfect business opportunity for enthusiastic entrepreneurs eager to get into business.

FRANCHISES VS. CHAINS

In a chain business, the parent company owns each individual location. Within a franchise concept, independent owners are in charge of their own outposts within the company, enjoying both the benefits of being their own boss while utilizing the support and business model of the larger brand. Most restaurants don’t start as franchises, but after experiencing initial success they choose to harness their growing potential and provide opportunities to motivated restauranteurs who wish to partner with a winning concept. The best examples of restaurant franchising focus on their strengths that translate to a larger audience and are capable of replication, making both the individual restaurants and the overall brand stronger together.

DIFFERENT FRANCHISING MODELS

Restaurants use franchising to expand their brands by allowing others to deliver their products and services to the public and through an agreed upon contract.

The relationship between franchisor and franchisee is detailed in the franchise agreement, other licenses, and in other documents, primarily the system’s operating manual(s). There is no fiduciary relationship between a franchisee and a franchisor. Although interdependent, the franchisor and franchisee share a common brand and a balanced investment in its success.

The type of restaurant franchise you may choose to own will depend largely on your goals and investment capabilities. A few models include:

SINGLE-UNIT FRANCHISES

The oldest and simplest form of the franchise relationship, a single-unit franchisee invests in the right to operate one distinct location of a branded business. This is the perfect opportunities for less experienced entrepreneurs to get in on the ground floor with a brand they believe in without over-stretching their financial investment.

MULTI-UNIT OR AREA DEVELOPMENTS

It is estimated today that over 50% of franchise owners operate more than one location. Multi-unit developers are granted the right and the obligation to a set number of locations, during a fixed period of time, and generally in a defined geographic territory. Development of multiple units differs from how a single-unit franchisee may acquire additional locations; in addition to signing a franchise agreement, multi-unit franchisees sign a development agreement at the commencement of the relationship. The area development agreement gives the right and the obligation to open multiple locations, and obligates the franchisor to allow them to complete a development schedule.

EXISTING FRANCHISES

Another method of entering the world of restaurant franchising is through buying an existing location from a franchisor or an existing franchisee that is looking to exit the system. This is an advantageous model for new restauranteurs, as the location is already built-out in the design of the brand, the seller is motivated, financing may be easier, customers are already aware of the existing restaurant, and you may be able to retain experienced staff hoping to stay with the business under new ownership.

INVESTING IN A FRANCHISE

Most restaurant franchises require initial investments anywhere from $10,000 to $1 million. Boutique eatery franchises like Your Pie offer a more reasonable price point with all the benefits of working with a brand that is equally invested in your success and growth as a restaurant owner.

One of the reasons restaurant franchises cost what they do is that they are “turnkey” ready. Having already learned through trial and error and previous success, the kitchen layout, dining room design, menu, and even the marketing campaign are all done for you. You don’t have to work at building name recognition because that recognition is part of what you are buying. In many ways, you are purchasing an automated business.

Furthermore, the level of training, operational direction and ongoing support makes restaurant franchising a meaningful and lasting investment with the right brand.

VET THE FRANCHISE LEADERSHIP TEAM

Having a solid team at the top of the franchisor organization is a key factor in franchisee success. To start, the corporate team needs to be well-versed in the segment the concept lies in.

Make sure you look at what the franchisor does to support new and existing franchisees. You will want to work with a team that will help you get your restaurants off the ground and be successful on an ongoing basis.

By looking into the leadership teams’ ability to grow, maintain and evolve a franchise, you can get a firm idea of how they’ll support you in your next endeavor.

FIND THAT SPECIAL SPOT

Franchises that succeed are those that have notable differentiators allowing it to stand out to consumers. This is especially important if you invest in a crowded space, like pizza. Is the concept different than anything else out there? What makes it stand out? These are important questions to consider.

One crucial element to look at is menu innovation. If a restaurant’s menu looks comparable to competitors’ menus, it may not be enough to win over consumers. That is, unless there are other factors that differentiate the menu. Your Pie was the first fast casual pizza franchise concept to focus on delivering authentic, fresh and handmade Italian flavors through a uniquely customizable, interactive dining experience.

Other differentiators to seek out include unique ways of implementing technology, a one-of-a-kind marketing strategy, the restaurant atmosphere (or look and feel) and anything else that contributes something extra to the customer experience.

THE IDEAL FRANCHISING OPPORTUNITY

Your Pie is one of the country’s most unique fast casual dining pizzerias, providing both a sense of community and hand-made perfection to diners while offering franchise owners the opportunity to build with a growing brand. Recognized as on of QSR magazine’s 10 Best Franchise Deals of 2020, Your Pie sets a high bar with low start-up costs, a winning concept, and a strong relationship between franchisor and franchisees.

With open territories in all lower United States, Your Pie is thrilled to work with motivated entrepreneurs who are equally passionate about good food, customer service, and building a lasting legacy.

To learn more about franchising with Your Pie, contact us.