How to Start a Franchise Restaurant: Key Steps and Tips

Restaurant business is one of the most challenging businesses. You need proper planning and implementation to start and run a restaurant. Without the proper technique, you can not survive in the competitive market. 

However, there are plenty of strategies you can apply in the restaurant business. All of the strategies are not equally effective. But there are many proven strategies that are highly successful and popular in the food business industry. 

Restaurant franchising is one of the most effective ways to start. A successful franchise restaurant can turn your investment into high profits. 

So, if you are planning to start a franchise restaurant, then you are heading in the right direction. This article is a complete guideline of how to start a franchise restaurant.

What is a Franchise Restaurant

A franchise restaurant is a type of restaurant that gets the right to use the brand reputation, business model, and marketing strategy of a parent company. However, it is a great way to be successful in the restaurant business. 

A restaurant franchise cuts down the risk of failure and ensures your business growth. Restaurant franchise is a common term used in the food industry. So, if you are new or an existing person related to the food industry, you must know the term. 

One most important thing to remember, an effective restaurant management software is an essential part of a restaurant business. 

Here we will go through in detail what a franchise is, who a franchisor is, and What is the difference between a franchisee and a franchisor.

• Franchisee

The franchisee is a person or a business that buys the right to operate any business under the franchisor. Overall, a franchise is an agreement, and the franchisee gets benefits from this. They hold the name, fame, trademarks, business strategies, and others. However, franchisees are strictly bound to maintain all the standards and rules that are set by the brands.

• Franchisor

The franchisor is the original owner of the brand or business. They provide the business agreements, concept, training, marketing strategies, etc. However, a franchisor is the business owner who provides a license to use their business model. The franchisor enforces and sets the brand's standards. 

How to Start a Franchise Restaurant

Restaurant franchising is a great way to start your food business. When you are planning to franchise a restaurant, you may either develop a franchise or you can buy one. 

But, remember, while planning for a restaurant franchise, you have to do complete research on the franchise. You have to understand the terms and conditions and then know about the agreements. 

Here, we will cover a complete guide on how to start a franchise restaurant. 

1. Research Franchise

Research is the first and most important part of restaurant franchising. Before you jump into the business, you must do proper research on franchise opportunities. As a part of research, you need to look for an individual brand that matches your interest. 

Moreover, franchise reputation and market demand also need to be considered. A well-reputed franchise is highly costly. So, in the research part, you need to know the initial investment cost. 

Along with these, training and support are also important facts of any restaurant franchise. So, every business should research well before going to buy any franchise.

2. Understand Franchise Model

Every franchise has its own model. It is also known as a Franchise Disclosure Document (FDD). So, while you choose any specific franchise, you must review the FDD clearly. 

However, you will get a clear concept of your rights and responsibilities. The franchise disclosure document provides the information on royalties, franchise fees, and other financial agreements. 

The franchise model is a vital part of making a clear concept of the brand's reputation and strategies.

3. Obtain a Secure Funding

Franchising a restaurant is costly. How much you need to pay depends on the brand reputation. But, on average, the cost of starting a franchise takes a handsome amount of money. 

So, before finalizing the agreement, you need secure funding. It will help you to bear all the costs and other financial aspects. However, you can take bank loans or SBA loans, or you can use your personal savings for secure funding. 

Additionally, you can get an investor to get financial help. These are the most effective ways to franchise a restaurant. 

4. Get Franchise Agreement

Now, it is time to apply and sign the franchise agreement. For these, you have to contact the franchisor and then submit an application. While they get your application, they will go through the next process. 

After reviewing your application, the franchisor will call you for an interview. Now, you need to attend the interview and discuss plans and strategies. 

Moreover, if they approve, they will provide a paper to sign. After signing the agreement, you are officially joining with the franchisee. Now, you have to pay some fees which are called the initial franchise fees.

5. Select a Location

One of the most challenging tasks of franchising a restaurant is choosing a location. In these circumstances, the franchisor can help to select the location. 

Remember, location plays a crucial role in restaurant business. So, you need to be very careful while selecting the location. Always choose a location with high traffic. 

Moreover, the location has a good parking area and is easily noticeable by the customers. There is the important part of selecting the locations.

6. Acquire Franchise Training

The franchisor offers different types of training programs. It helps to know the brand strategies completely. Now, you have to attend the franchise training. 

The training will provide all the information, such as how to operate a business. Moreover, the training sessions will cover all the necessary aspects of the food business. 

It includes the food handling process, managing staff, inventory management, and marketing strategies. So, you must join the training session while starting the franchise restaurant.

7. Collect License and Permits

Every business needs some specific licenses and permits. Restaurant businesses also need some legal permission and licenses. While you select a location for your franchise restaurant, you have to apply for the permits. 

Once you get all the permissions, then you can start your business. There are many different types of licenses and permissions you need to run your restaurant. 

First of all, you need a business license, and then you will also need a food handler license, a health and safety license, fire handling permits, a liquor license, location permits, and so on. 

Once you apply for the license, you have to wait a certain period of time to get the license. When you get all the necessary permits, you can go for the next step.

8. Set and Start Your Business

Now, you need to set up your business. First of all, you need a space where you will start your restaurant business. Then, you have to decorate your restaurant's interior and exterior. You need to focus on restaurant inventory and kitchen equipment. 

A good kitchen is the heart of a restaurant. After successfully setting up your restaurant, you need to hire your staff. Remember, in the restaurant business, staff plays a crucial role. So, while hiring staff, you need to be very careful. 

Moreover, you can arrange a training session to train your restaurant staff. After completing all the tasks, you have to do the restaurant marketing. Without proper marketing, a restaurant can never be successful. 

In that case, you can use franchisor marketing strategies. And finally, you have to select a date for the grand opening of your franchise restaurant.

How Much Does it Cost to Start a Franchise Restaurant​

How much money do I need to start a franchise? is the first concern while planning for a franchise restaurant. Without the cost estimation, you can not get the franchise. Before starting, you should know how much it costs to start a franchise. 

However, the average cost of a franchise restaurant is $100,000 to $6 million. The cost can vary a lot. It depends on the brand reputation, restaurant size, location, and others. 

The cost can be broken down into different sectors, such as initial cost, ongoing cost, and others. Here is a complete breakdown of is it cheaper to start a franchise? Or restaurant franchise costs. 

1.Initial Franchise Fee

The initial franchise fee is also known as a franchise fee. It is a fee that is paid to the franchisor by the franchisee. Most of the time it is a one-time fee. And these types of fees are being provided while the franchise agreement is being done.

Range: $8,000–$50,000+

2.Build-Out and Equipment

Build-out and equipment fees play a major role in franchise restaurants. It cost a very high amount. However, it includes construction, kitchen equipment, furniture, and so on.

Range: $40,000–$350,000+

3.Inventory and Supplies

In the restaurant business, inventory and supplies are important. This type of cost includes food costs, utensils, packaging, etc.

Range: $30,000–$50,000

4.Training and Staffing

Almost all the franchisors provide training and staffing. It helps to understand the business and how to operate it properly. So, while franchising, you need to pay for training.

Range: $10,000–$35,000

5.Licenses and Permits

You can not start your restaurant business without the proper license and permissions. Different licenses take different amounts. Some are expensive, and some are less expensive. Licenses and permits include business licenses, health permits, food safety permits, etc.

Range: $8,000–$40,000

6.Marketing and Grand Opening

Marketing is important for franchise restaurants. Most popular franchises offer unique and effective marketing strategies. And the franchisor charges a certain amount of money for the marketing promotion.

Range: $10,000–$30,000

Note:

You may ask, "How to start a franchise restaurant with no money?"

In this regard, starting a franchise restaurant with no money is very challenging. But not the impossible ones. As we know, a franchise charges a significant amount of money. 

So, you must need a strong financial backup while franchising. If you do not have any money, you can also get a franchise. You may take bank loans, business loans, or find any investors. These are the ways to start a franchise with no money. 

Frequently Asked Questions(FAQ)

1.What's the cheapest restaurant franchise to open?

While starting a franchise restaurant, you can ask, "What's the cheapest restaurant franchise to open?" Here is a list of some cheapest franchise restaurants. You can easily afford this franchise's lower costs.

• Baskin-Robbins
• Chester's Chicken
• Subway
• Firehouse Subs
• Captain's
• Mucho Burrito
• Domino's Pizza

2.How do I make my restaurant franchise successful?

Starting a restaurant franchise is difficult. But it is more challenging to make it successful. A successful franchise can make you beneficial. So, you must focus on it. Here are some important things you can focus on to make your franchise restaurant successful.

• Strong Franchise Agreements
• A Proper Business Plan
• Tanning
• Effective Operation
• Financial Management
• Marketing and Branding, etc.

3.Is McDonald's a franchise?

Yes, McDonald's is a very popular franchise. Moreover, it is one of the biggest and most successful franchises. They do not have any specific restaurant that is owned by the company. 

Most of the restaurants are owned and run by franchisees. McDonald’s offers a franchise business model, and the individual can open and operate McDonald’s restaurants under the company’s brand.

The Verdict

You can be a famous restaurant business owner if you can franchise effectively. Franchise is an opportunity for opening a great journey. But you need proper guidelines and a plan. 

When you can successfully operate and manage the franchise, no one can beat you. As we know, the food business is highly profitable. You can get your business success easily with this technique. 

But remember, franchise profit margins depend on the franchisor and investment level. This article contains all the information on how to start a franchise restaurant and the cost estimation. 

So, you can be highly benefited by reading this article. You must go through all the processes before starting a franchise restaurant.