Pros and Cons of Opening A Food Franchise

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Owning a business is no easy task, especially when it comes to the food industry. There are a lot of factors that contribute to the success (or failure) of the business. One of the most important pieces is the franchisee himself. According to Jeff Elgin’s article on Entrepreneur.com titled “Buying a Restaurant Franchise”, Jeff identifies the secret to success in the industry as having the skills a good franchisee needs. Some of these skills include being patient with employee turnover and dealing with keeping the business up to legal code. He also recommends shadowing a successful franchisee before making the decision to open your own which as it will indicate if you possess the skills necessary for going into the restaurant industry.

In making the decision to open a restaurant franchise, it is important to consider the pros and cons. Some of the pros of opening a franchise versus a non-franchise is that the company has already built a name for itself. There will already be a built-in demand for the product and it will be easier for the business to be successful. There is also financial benefit when it comes to opening a franchise because the banks are more willing to lend money as they are more familiar with the machinery and real estate needs of a prepared food operation(machinery, land area, etc.). If successful, a benefit of having a successful franchise is the prestige associated with being a successful business owner. Having this prestige will make it easier to open more franchises as well if desired.

Even though opening a restaurant franchise has its benefits, there are also some factors that a new franchisee must be careful about and consider. The start-up cost of opening a new franchise is very high.  Having the food prep stations, customer seating, sinks, bathroom, etc., is expensive when added up. There are also government codes and regulations that the franchisee must comply to, and the time and money put towards these regulations is significant. Ideally other franchisees in the area would be able to assist in making sure the new restaurant meets government regulations, but this not always the case. Possibly the most important piece of owning a franchise is hiring employees. It is hoped that the employees will be satisfactory, but unfortunately, they are often not. Turnover rates are often very high as well. With employees quitting as frequently as they do, that means more money and time must be spent training new employees to replace them. This is typically the number one challenge food franchisees face.

Owning a food franchise is a lot of work. It takes someone with dedication and patience to be able to successfully run this type of business. If someone has these qualities and is willing to open their own franchise, then they must be aware of the pros and cons. On the plus side, having a food franchise versus an independent restaurant means that consumers will already have the brand loyalty for the product. On the other side, franchisees must be aware of the potential disadvantages. There are large start-up costs and initially low profits gained from the first franchise opened. All things considered, with hard work and dedication, it is definitely worth looking into a becoming a food franchisee.

- Aaron Gomez