Could your Restaurant be a Franchise? How to Tell
Since life, liberty and the pursuit of happiness may include the dream of growing a business, we present these “elements of a franchisable business,” in time for the 4th of July.
They come courtesy of Kay Ainsley, a consultant with MSA Worldwide, and Joe Fittante, an attorney with Larkin Hoffman, from a recent presentation. If you can answer yes to the following questions, your chances of success increase, they say.
First, is your restaurant profitable? If it’s not, don’t franchise it, the pair advise. “And remember—would it be profitable if you took 6 percent off the top,” in the form of royalties?
Second, can you replicate what you’re doing? If you are a creative chef who likes to tailor dishes to each patron and dream up entrees based on the day’s take at the farmer’s market—stick to a single restaurant and have at it. A franchise has to be an easily followed system.
Third, is it a long-term business or a fad (think Beanie Babies for an example of the latter) and can it evolve to keep pace with consumer demand? Fittante advises to think years ahead, when franchisees will wonder why they’re going to continue to pay their royalty fees.
Fourth, does it have sizzle? “What makes someone want to buy your franchise instead of doing it on their own,” is the important question to consider.