Best Fast Food Franchise Opportunities
For people looking to get into the restaurant business, a fast food franchise is usually a really great opportunity to open up a restaurant. There are a lot of great benefits to fast food franchises. You’ve got instant name recognition, built in marketing from corporate offices, and a product that you know people love. However, buying into a food franchise is not always as easy or cheap as you might think. So, before you take the plunge and buy, here are a few things to consider.
Know what makes a restaurant a franchise.
Not all chain restaurants are franchises. For example, Starbucks is one of the most well-known chains in the world, but it is not a franchise. Every Starbucks store is company owned and operated. Wendy’s however, is a restaurant franchise. Owners (franchisees) buy the rights to open and operate a Wendy’s. And, as part of that deal, the franchisee pays a monthly royalty to the corporate office (franchisor). In return, the franchisor pays for marketing, menu designs and provides help solving problems for their franchisees.
Identify your budget and your qualifications.
The best fast food franchises are expensive. More than anything else, the cost of the franchise will limit your choices when it comes to buying into food franchise opportunities. Money aside, you’ll also want to think about your restaurant experience. Franchisors don’t just hand over the keys to their business to just anyone, they want to make sure the person they have selling their product is qualified to do the job.
Create a business plan.
Before you can get any sort of financing (whether from a bank or an investor), you’ll need to create a restaurant business plan. As you create your plan, you’ll be forced to look at things like the population of an area, profile the local economy and identify your choices to build/rent.
Have a lawyer read over the franchise contract.
Once you’ve been approved to franchise fast food and you’ve secured your financing, you’ll need to sign a contract with the franchisor. Before you sign anything, make sure you read over that contract very closely. Even the best food franchises can hide things in their contracts, so it’s always a good idea to have a lawyer read it over with you. Make sure you know what will happen if by some unfortunate odds your franchise fails. Are you stuck paying the franchisor a set amount of money each year regardless of your success or failure? Who owns the equipment? Can you get any of your money back? Just because you’re part of a national chain, doesn’t mean you’ll be an instant success. It still takes a lot of work to run a successful business.
Now that you know what to do to get started, let’s take a look at the pros and cons to owning one of the best food franchises.
- Successful track record – Most of the top food franchises have multiple restaurants that have been operating for quite some time. It’s pretty easy to see they are successful.
- Financing help – Most traditional lenders are really familiar with what it takes to get a fast food franchise up and running. From equipment to real estate needs, lenders are ready and willing to finance these types of restaurants because of their typically high revenue.
- Built-in demand – Most consumers have been trained (unbeknownst to them) to look for fast food franchises, which is a really great advantage when you’re just getting started.
- High upfront costs – Most of the top fast food franchises require you put down a pretty big chunk of change to get started. You’ll need to pay your franchise fee, build or rent a place, buy kitchen equipment and supplies and the list goes on and on.
- Employee problems – Most fast food businesses require a lot of employees to function, and these employees are generally paid as little as possible. Because you’ll be working with people making minimum wage (or close to it), you’ll experience a lot of turnover and it can be a challenge to keep a full staff.
- Low margins – You’ll be paying for both the cost of the food you sale and the labor it takes to prepare it, so your actual margins are actually relatively low.
Now that you know more about what it takes to run a successful business, take a look at our best fast food franchise list to see which one is the best fit for you.