3 Franchise Success Markers to Consider Before Buying that Restaurant

There are a number of benefits to buying a restaurant franchise rather than trying to start your own single-store location. You get to set up shop under an established brand name with a proven system of operations. Depending on which franchise you choose, you may also get handed trained staff, marketing plans, in-place supplier relationships and an existing customer base. That said, not all franchises are created equally, and finding the brand that is the right fit for your personal style and needs takes some research. Here are the three biggest success markers to consider before determining which franchise brand is best for you.

Restaurant Brand Perception: Don’t Pick a Bad Egg

The first marker of restaurant franchise success is the local populace’s overall perception of the brand. The last thing you need when starting a new business is to try to fight a bad reputation for poor service or inedible food before you’ve even gotten started. That’s like hobbling your horse before you push him onto the race track. It’s a waste of time and effort. Make sure that you’ve done your research on consumer perception of the brand before you buy.

Is It Better to Pick a New or an Already-Established Franchise?

Assuming you have narrowed your list of potential franchise options down to only those with a neutral or positive consumer perception, the next question to ask yourself is whether or not you want to go with an already-established, well-known brand or a new restaurant franchise startup. There are pros and cons to both choices.

The benefits of going with an established brand include an established track record, customer base and system of operation. The cons can include higher franchise fees and less management flexibility. Before you go this route, ask the seller for detailed financial information for a minimum of the past three years. This information will give you a much clearer picture of the highs, lows and warning signs it is critical to know about before striking any deal.

The benefits of going with a new startup restaurant franchise are that you’re able to start from scratch, often forging your own relationships and being totally in charge of creating the brand perception for the franchise in your area. New franchises are often cheaper to get into as well, since you won’t have to pay a higher fee for goodwill or purchase past cash flow. The cons include greater risk and more elbow grease to get going.

Total Franchise Cost and Management Flexibility

The last considerations to take into account when choosing a successful restaurant franchise are the total cost of getting going and the amount of management flexibility the franchise allows. Franchises are often prone to a number of additional fees and royalties, including the upfront franchise fee, as well as possible fees for renovations, marketing campaigns, training materials, extra suppliers and annual “membership” to the franchise. Brands vary widely on the fees that are included in the agreement, so be sure you have read the fine print before you sign!

While most franchises have a set of guidelines about how the business should be operated and marketed, management flexibility varies widely from franchise to franchise as well. Some will dictate all promotions and policies (leaving you free to run the shop); others will give you much greater freedom (giving you more choice and control over how you run your business). Which you choose has a lot to do with how much control you want over your restaurant.

Buying a franchise isn’t everyone’s cup of tea, but can be quite a successful venture if the franchise is properly selected. The bottom line: don’t pick your franchise because it makes your favorite dish. Do your homework and pick your franchise based on the one that has the best chances of success.

Tags: franchise success markers, profitable restaurant investments, restaurant franchise, restaurant investment strategies