Food

7 Tips on How to Own a Fast Food

Franchise

To begin with, a franchise is a term that describes an already established business where the franchise owners permit third-party operators to use the business name, model, and branding. In your case, you can enjoy these rights in exchange for a royalty fee or service fee. Also, you must be ready to provide ongoing support for the franchise in the form of marketing and advisement.

But that alone is not enough to make you a brand new entrepreneur in the franchise business, especially the fast-food business. What you need is a start-up cost ranging from $10,000 to $1,000,000. Most importantly, your new restaurant should sell the same type of goods(food and similar products) and services known for that particular franchise as per the franchise agreement. Here are additional tips on how to own a fast-food franchise.

Tip 1: Prepare an Adequate Budget for Your Fast Food Franchise

As a potential franchisee of a new restaurant, your first assignment in owning a fast-food franchise is preparing an adequate budget. In the actual sense, the budget is the exact point where your franchise starts.  Your budget may include the entire franchise fee, initial investment, and any other franchise costs. The budget may also vary depending on the franchise and franchisor of your choice.

Tip 2: Obtain an FDD

According to the Federal Trade Commission (FTC), every franchisee must obtain a franchise disclosure document (FDD) from the franchisor. The FDD provides you with a complete outline of the whole agreement, initial franchise fees, advertising, and royalty fees. It further reveals laid-down restrictions on where you (a potential franchisee) should buy supplies and products for your own restaurant.

Tip 3: Choose the Most Appropriate Franchisor

The most popular fast-food franchises include:

  • McDonald’s
  • Subway
  • KFC
  • Chick-fil-A
  • Burger King
  • Domino’s Pizza
  • Dunkin’ Donuts
  • Taco Bell
  • Wendy’s
  • Arby’s
  • Pizza Hut

All these franchises have different requirements for potential franchisees. So, as a new business owner in the fast-food franchise, you need to check with your target franchisor’s requirements before you get started.

Tip 4: Consider the Franchise Fees

Most franchises with multi-unit of fast-food chain restaurants demand start fees from new business owners. For example, if you are franchising a Chick-fil-A, you will be required to pay an initial franchise fee of about $6,250 or $37,500. This start-up fee includes the cost of land, the overall cost of construction, and the total cost of restaurant equipment. The good news is that the franchisee can pay this amount over a given period in fees to the franchisor or parent company.

For example, f you are looking to franchise Taco Bell, you will have to settle an initial franchise fee of around $45,000, including a monthly service fee of 5.5% of gross sales. You will also have to pay another fee of about 4.5% of the gross sales (for marketing support).

Tip 5:Take the Market Placement into Account

Just before you approach a franchisor, make sure to identify the areas, regions, or locations you want to operate. In this case, work hand-in-hand with real estate departments that support the success of such franchises.

These real states work with potential franchisees like you to identify the best neighborhood for your quick-service restaurant. Ensure that your market placement targets a place with a good mix of clientele and other restaurant chains selling different products from yours.

Tip 6: Think of Buying or Leasing A fast Food Restaurant

The other way how to own a fast-food franchise is by buying or leasing an established chain of fast-food restaurants. For example, if you choose to become a McDonald’s Franchisee, you will be required to pay up to a 40% down payment. This is the cost of the space for your new restaurant.

You may also have to make a 25% down payment for buying an existing restaurant. This 25% of the down payment should be in cash. You will finance the rest of the total cost through the help of a lending institution.

However, most franchisors work with franchisees to find a suitable location for the franchise opportunity. But if you have the means, you can build your own restaurant, create your own Digital Menu Boards, and brand it using your new fast food restaurant franchisor’s specifications.

Tip 7: Establish New Partnerships

Connect with the suppliers through the existing brands and companies. This new form of partnership will help your fast food franchise find a reliable source of products and other goods. On the other hand, take advantage of the parent company’s provision of guidelines and specifications for the right equipment needed to run your new business. A perfect example is Subway which boasts an equipment leasing option in addition to offering to facilitate financing for its new franchisees.

Ready to Invest in a Fast Food Franchise?

From your business experience and fast food restaurant ownership point of view, you are fully aware of what a fast-food franchise entails. Besides your net worth and liquid assets, you need tips on how to own a fast-food franchise as mentioned above. In return, you will automatically benefit from the franchisor’s name recognition and brand.

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