Franchise Restaurant Checklist

Deciding to invest in a franchised restaurant can be a great way for you business to save some money, and marketing expenses. However, there are many things you should know about owning a franchise. First off, they don't always save you from the dreaded restaurant failure, and in fact sometimes corporate policies can eliminate your marketing creativity. With that being said, if you are investing in a well known franchise restaurant it may be easier to create a checklist. This will help you understand what to look for, and ultimately set your restaurant up for success.

Compare and Contrast

It doesn't matter if you are opening a franchised fast food restaurant or a full service dining establishment, the first thing you must do is consult with other franchise owners within the franchise. If you feel comfortable in a conversation with them, ask them how much capital outlay is required, any challenges faced and how their margins are affecting the way they do business. A major advantage of a franchised restaurant is that you are able to assess what other franchises are doing well and benchmark your success to theirs.

Understand Exact Costs

Leave no room for mistakes when assessing the costs of opening a franchise. Most of the time, your franchise's initial capital outlay is quite large. Ask what the royalty fees are, franchising fees, and restaurants requirements with net worth. Most companies require a minimum net worth of at least $500,000 with liquid assets. If you have sized over the costs with a financial advisor, (or a friend in finance) make sure you understand how a franchise policy can impact your business.

Have a Clear Cut Business Plan

Don't think that because you purchase a franchise you are exempt from planning out your future. Creating a business plan will force you to think about how the franchise will impact what you want to do with your business. If you have extravagant plans for marketing and decorations, you will need to realize that some franchises have strict policies on atmosphere and promotions. A business plan will also give you insight on your location choices, and how these will impact your success. Make sure all your loose ends are tied up before you even speak with contract lawyers.

Understand Your Contract!

It is crucial to understand both your state franchise law and the contract agreements fully. Once the initial contract is set to be signed, it is imperative that your lawyer is present. A lawyer will be able to ensure that there are no hidden fees or loopholes. Some franchise owners will make their franchises look more attractive by secretly purchasing the failed franchises. Obviously you need to trust your franchise and make sure they aren't doing anything shady to improve their numbers and attractiveness. Since the restaurant industry has low margins, there is often little room for mistakes, especially in the first stages of your franchise. Choosing between a franchise and a startup can be a tough decision, but once you understand what you need to succeed with a franchise it simplifies your decisions. The restaurant industry is a great industry to be in, it can be stressful at times, but in the end it is worth it for many.