Any business venture comes with a set of pros and cons that must be examined before diving into the waters. Nothing is without risk, and business is defined by that same risk. Those who wish a safe and guaranteed investment path will soon find themselves with little to show for it. That being said, it’s important to recognize the inherent cons of running a restaurant franchise, but not for the reasons you might think.
Traditional “cons” should instead be looked at as opportunity “pros” for would-be franchisees who wish to make a new career change. Yes, it’s a business, but not quite the same as other industries. Let’s examine how to take traditional restaurant franchise cons and turn them into pros.
STARTUP COSTS
Running a franchise requires a decent chunk of change to get started. Depending on your franchise of choice, costs could run from the low-to-mid six figures or even seven figures, and that can scare many potential franchisees off. Typically this involves a mixture of basic operating costs and licensing fees. The former can easily be dealt with by sourcing out contractors in your area to reduce overall costs, but the latter is more of a fixed thing.
However, this isn’t a con. Many would-be franchisees make the mistake of seeing a licensing fee as another drain on their bottom line. It’s important to think of what you’re getting when you pay that licensing fee. Consider the money saved on marketing costs, customer research and other fine details. You’ll soon find that paying a licensing fee is actually a huge pro given the massive support your franchisor is giving you, right from the start.
NO BRAND CONTROL
Yes, it’s true that franchising involves doing things by the books according to the standards set down by the franchisor, but why should this be viewed as a con? Potential restaurateurs may very well opt to open their own restaurant and make a go of it, but the risks are enormous. This is especially true given the effects of the Covid-19 pandemic on many restaurants. While many have shut up shop for good, franchises are actually experiencing a growth of opportunities.
You may not be able to steer the ship, but that’s one less thing to worry about. By focusing on day to day operations, you are allowing a system with a proven track record to do what it was designed to do – entice patrons. The hard work has already been done, and your attempt to fix what isn’t broken simply won’t work. Sit back and be glad you’re part of a branding solution that is paying dividends for so many franchisees already.
CITY REGULATIONS
Certain U.S. and Canadian cities have strict regulations in place when it comes to handling employees and paying them for things like last-minute shift changes, etc. It’s important to understand the impact these regulations can have on your franchise, as certain challenges may pop up that require some due diligence.
Thankfully, most franchisors have gone through this at some point or another, and they’re prepared. Some franchisors insist that their franchise locations use a common shared employee scheduling program that takes into account regional regulations and bylaws. With the power of a franchisor at your back, it’s easy to get support on these types of issues and move forward. Besides, every lesson is a valuable one that you can take with you to your next franchise location if you wish to diversify your investment portfolio.
COMPETITION
Sometimes the strength of a franchise brand isn’t enough to guarantee a wellspring of financial success. If there’s competition in your area, you’re bound to have trouble moving forward. Your franchise will no doubt make money, but you might be sacrificing a lot of your earning potential if you’re rubbing shoulders with restaurants offering a similar menu.
This is not a con. It forces potential franchisees to do their due diligence and analyze the market by conducting a feasibility study that pinpoints competition within your desired area, giving them a birds-eye view of the situation. This is preparedness, and that means power. It allows franchisees to be selective as to where to break ground in a particular area to maximize exposure. Alternatively, the franchisee may opt for a completely different location with less competition in the pool. It’s never good to fly in blind and hope for the best.
The most important thing to understand when starting a franchise is the concept of risk. Without it, there are no rewards. The trick is having the confidence to join forces with an established franchisor who knows the market, the branding and the tricks of the trade to help you get started. In contrast to owning your own restaurant, franchising means never having to fly solo. From day one, you have a dedicated team at your back who want to see your location succeed just as much as you do. That’s an encouraging thought.
For more information on franchising with us, please get in touch today! There are many exciting opportunities for those ready to take the plunge.
