Multi-Unit Franchise Experts

Franchise Guide

Restaurant Franchises

Are you an experienced business person looking to invest in a restaurant franchise? Or perhaps you are just starting your exploration into the world of franchises and you are wondering about the process? Whatever the case may be, having a thorough understanding of restaurant franchises and the questions you should be asking yourself when considering purchasing one is very important. Whether you are considering a fast food franchise such as McDonald’s, a corporate restaurant such as Applebee’s, or even a local favorite such as The Cheesecake Factory, there are many questions to consider as you embark on this journey.

We asked the International Franchise Professionals Group (IFPG), a membership-based franchise consulting network with over 1,300 franchisors, franchise consultants and vendor members, to weigh in on some frequently asked questions that business owners need to consider when looking to purchase a restaurant franchise.

Do I need to have a lot of money to purchase a restaurant franchise?

The amount of money you need to purchase a restaurant franchise varies greatly depending on the particular franchise. Generally, you can expect to need about $50,000 – $200,000 for startup costs, which includes the franchising fee as well as additional fees for setup, legal, and other miscellaneous costs.

Do I need to be an experienced business professional to purchase a restaurant franchise?

Not necessarily. Many restaurant franchises have support and training programs that help new franchise owners get up to speed on the business quickly. Some franchisors may even offer financing and assistance with locating prime locations. For those who have never operated a restaurant, you may want to do your research and find a franchise with an extensive onboarding program that can assist in your success.

What type of investment return can I expect?

This will vary depending on the specific franchise you choose to purchase and the success of the business. Generally speaking, you should be expecting at least 8%-10% of your investment back in profits. It is important to note that this is a long-term investment and the return may be higher or lower depending on factors such as the franchise’s performance, the market, and other variables.

Are there any other costs associated with running a franchise?

Yes, outside of the franchising fee, there are often other costs you should consider. These include, but are not limited to, monthly franchisor royalty fees, staff salaries, inventory and supplies, advertising costs, property costs, insurance expenses, and more. With that said, some franchisors may provide support such as discounted supplies, marketing materials, financing assistance, and more, so it is important to do your research and understand exactly what is included with your franchise.

What type of legal documents should I expect to sign?

When purchasing a restaurant franchise, you will likely need to sign a variety of legal documents. This could include documents such as a Franchise Agreement, Purchase Agreement, Partnership Agreements, and more. It is important to understand the terms of the documents you are signing and to seek legal counsel for any documents you have questions about.

Are there any restrictions or special considerations I should be aware of?

It is important to be aware that each state, in addition to local governments, may have specific rules and regulations when it comes to restaurant franchises. Additionally, most franchisors provide a list of territories in which they are open to doing business. It is important to recognize that this may be a long-term commitment and you should become aware of any restrictions or rules that may apply to you before getting started.

Are there any benefits to owning a restaurant franchise?

There are many benefits to owning a restaurant franchise. Overall, with a franchise, you benefit from the recognition and reputation that usually comes with an existing established brand. In addition, you benefit from the support and training that comes with a franchise, as well as the fact that the franchise’s national marketing campaigns will likely create more buzz for your business than you would be able to if you were starting an independent restaurant.

At the IFPG, we understand the importance of understanding what questions to ask and the nuances that come with serving as a franchise owner. Whether you are considering a fast-food joint or a local eatery, we can help guide you through the process of exploring and investing in a restaurant franchise. Remember, do your research, ask the right questions, and find a franchise with an extensive onboarding program that can assist in your success.

Topics:

Restaurant Franchises,

Investing in Franchise,

Franchise Agreement

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