The Advantages and Disadvantage of Opening a Restaurant Franchise

When I talk about running a franchise business, most people automatically assume I'm talking restaurant franchises. That's because most franchises in the food industry are wildly successful and in turn growing in numbers and popularity. You'll be hard pressed to find independent restaurants at all anymore due to the success of food franchises.

The best part is that despite the growing number of food franchises, buying a restaurant franchise is still one of the few close to being a guarantee opportunity in the world of business today. It's true that there are number of difficult issues that come with owning a restaurant franchise, but that's true with any business. Here are both sides of owning a food franchise showing both the advantages and disadvantages of them:

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Advantages

  • Built-in demand - For years upon years, people have been hardwired to grab something to eat at a franchise food chain when they are hungry and away from home. This is a major advantage for any start up company. It's years of marketing already done for you. The only thing you need to consider is the future of your product and will there be a demand for it in your local geographical area.


  • Financing - You can choose a number of different outlets to find financing. When it comes to finding funding for a food operation business, the process is extremely easy and not as complicated. The reason is because banks typically know what is involved with opening a restaurant and feel more comfortable approving the loans. The high revenue generated by some of the food franchises doesn't hurt, either.


  • Track record of success - Since a typical food franchise has multiple franchisees, it is easy to determine how successful or not they are. You can see if they have a record of success along with where and what demographics are the most successful. With this type of information available, you can make a well-informed decision before making an investment.


  • Prestige - Depending on who you speak to, people often think that all restaurant owners are people of high society that also comes with a touch of glamor. There are a lot of franchise owners that get into the restaurant business for this reason alone.


Disadvantages

  • Labor - I'm sure you've noticed that most food businesses need a lot of employees to function properly and smoothly with the majority of those workers being low-paid. That leads to a workforce of unreliable employees with a high turnover rate. Finding and keeping qualified employees is a major challenge for a food franchise.


  • Low margins - The food industry is very price sensitive, more so in the world of fast food chains. This leaves you with a very fine line to walk with cost of goods and labor and making a profit. It's true that food franchises often see high revenues but the net margins are often overlooked. You are also susceptible to food spoilage and theft along with other issues only found in the food industry.


  • Expensive initial investment - A food franchise will require a substantial investment from you in order to get started. You need to pay for many items up front in order to run the business. Not only do you need to pay for the food and labor but also ovens, grease disposal, venting, furniture, and maintenance among many other expenses.

The Advantages and Disadvantage of Opening a Restaurant Franchise

Red Hot Franchises, at www.redhotfranchises.com, offers franchises opportunities. We feature low cost franchises, retail franchises, and other franchise categories.

10 comments:

  1. Restaurant franchise business has a many advantages and disadvantages which all are describes at above blog. Buying a restaurant franchise is a best option for business because people's are like to eat at a franchise food chain in nowadays so that it has a big opportunity.


    Canadian franchise

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  2. nice posting.. thanks for sharing.

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  3. Personally, the nicest thing about buying a franchise is the genuine advice that the franchisee can get from his franchisor. Most franchisors provide this kind of service with a heart. A franchisee can learn many things along the way with the help of his franchisor. Franchisors won't let you down.

    Joseph Carr

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  4. It’s true. One important point to ponder about starting or franchising a business is your finances, your starting capital, to be precise. Some get their capital through personal funding, others from their savings accounts, credit cards or retirement accounts, while, some through friends and family. Another option would be, “debt financing”, otherwise known as, loans. These are offered by banks and accredited government agencies.

    Cameron Scott

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  5. The easiest way to achieve greater sales is to ensure that every customer experience results in a very satisfied loyal, frequent user customer who recommends your business to their friends and neighbors. This is interesting! Thank you for posting this one. The very core and essence of a company is to be viewed by all customers as the first and only choice. We’ve got an emotional connection forged with our customers – and soon-to be customers. This emotional connection takes us beyond the price point and into the hearts and minds (and stomachs) of our consumers. Toronto francises

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  6. It is good to know the advantages and disadvantages of opening a restaurant franchise. It will help you along the way, especially if you are just starting in the industry. For me, one advantage of opening a restaurant franchise is that, if the brand is already established, you can be sure that people already know the kind of services/products you are offering.



    @ Clint Shaff

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  7. Beginning a new business is a dangerous project and this is particularly the situation with restaurants. However, restaurants franchising can offer an perfect home based business with little risks. By the way, I had read the whole content and liked the details about benefits and disadvantage of starting a restaurants franchise.

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  8. You’re right about that, Joseph. One of the things that can encourage a reluctant franchisee is the assurance of support in terms of excellent training, creative branding, and good marketing. Being given this offer makes the franchisee comfortable in pushing through the franchising plan. Also, cooperation between franchises helps build a united reputation for the business name.

    - Lonnie Lisa

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    Replies
    1. Really very useful and nice information over here, at present society franchise are becoming more famous and it's gain more popularity in this world. Not only in this business, in any type of business these are an essential things for getting profits and popularity.
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  9. Thank you for sharing and for this nice information. I really appreciate your work, keep it up.

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