Owning and running a restaurant can be one of the most rewarding experiences for a business owner. It offers a chance at financial growth and stability, the personal satisfaction of growing a business, the opportunity to offer gainful employment within a community, and the enjoyment of getting to know customers and others during the normal restaurant operations. However, selecting a franchise restaurant can be a daunting task for even the most seasoned entrepreneur or serial franchisor. Many people have a serious interest or desire in buying a franchise, but still ultimately struggle with asking the most important question of how to buy a franchise restaurant.
Identify Restaurant Franchise Opportunities in Your Area
The first question isn’t actually “how to buy a franchise restaurant,” but more realistically: “what franchise restaurant should I buy?”
After all, there are quite literally thousands of franchise opportunities available in the United States with more and more being offered each day as business recognize the enormous growth potential associated with franchising.
Franchising is a lot like fishing in that you cast a very wide net in the beginning. First of all, you need to see what franchises are even realistic viable options for your particular market and financial situation. The first step for many would-be franchisees is to perform an online search via a franchise portal or to attend a franchise expo. Using a franchise portal is far more efficient since it allows you to filter by type of franchise (in this case, a restaurant), available markets (not all brands offer franchise opportunities in all states), and required startup costs. While many franchisors do not present their specific franchise costs until far later in the franchise exploration journey, most portals allow users to filter based on what startup costs they can realistically handle.
Since “restaurants” is a pretty large category, it will likely yield a very high number of results. From these results, you may wish to filter down even further based on type of restaurant (dine-in, quick service, coffee shop/café, fast-casual, etc.) as well as type of cuisine offering (Mexican, Italian, Mediterranean, etc.). By now, you should have a fairly manageable list and you can begin to narrow it down.
During your franchise search, it is important to make notes and jot down questions as you go along. It may get confusing as you find yourself talking to many different franchise brands, so organization is crucial.
How to buy a franchise restaurant?
1. Narrow your Search
Now that you have a lot of fish in your net, it is important to decide which ones to keep and which ones to discard. You likely already eliminated a lot of franchises during your initial search, but now it is time to narrow your focus even more.
2. Reach out with Initial Interest
The next step in how to buy a franchise restaurant is to ask for more information. If you are conducting your search online, you can usually do this one of two ways. You can oftentimes contact the franchisor directly through a contact form on the franchise portal or you can usually go to the franchisor’s main website. Most franchise brands have a “franchising” or “franchising opportunities” tab that is clearly visible on their home page. This is designed not only to provide a basic overview of the franchise offering, but more importantly, to offer a way to contact the franchisee for a follow-up conversation or email.
Don’t worry, you aren’t committing to anything at all at this stage in the process.
This form usually just asks for basic information such as name, contact information, location, and a brief summary of interest, experience, or qualifications. A franchise representative will usually reach out to you via telephone or email to get to know more about you and to tell you about the franchise brand and offering in more detail.
3. Perform a Self-Assessment
During the exploratory phase, you will narrow your search even more as well as take a realistic self-inventory. As you go further along in the journey, a franchisor will get to know you better as you work with them to identify whether your experience, qualifications, personality, and values are a potential match for their franchise brand.
You will also need to be realistic about your finances. Cost can limit your options when it comes to buying a restaurant franchise. If you are planning on getting a loan or other financing, now is the time to seriously start exploring whether or not that is feasible. Many banks require comprehensive business plans and financial projections before agreeing to a loan.
Another important factor in opening a restaurant franchise is experience. Operating a restaurant is not the same thing as running a gym, teaching elementary school, or managing a bank. It requires a specific set of skills and experience as well as industry knowledge and strong customer service skills. As soon as you understand how to buy a restaurant franchise, you should ask yourself how you plan to run it. That being said, many successful franchisees know that they have certain areas of weakness when it comes to restaurant operations and make plans to hire a seasoned manager. Once you have a general plan of how you plan to operate the restaurant on a day-to-day basis, you should perform your local market research.
4. Perform Local Market Research
Once you have a short list of potential franchises, you will need to find out if your market can support this. You will need to build a profile of your local market. This means studying your local competition as well as realistically assessing the local economy. For example, if your community area already has several coffee shops, then you might want to look at a Mediterranean franchise restaurant offering. You should also make sure that the population and average household income in your area can support your business. If the prices are too high, then you will struggle to find customers. If the population density is too low, then you might not have enough foot traffic to keep your doors open.
5. Attend Discovery Day
By the time you have your search narrowed down to about three to four franchises, you should attend discovery day at each franchise. This will give you a chance to see the business operations behind the scenes firsthand as well as talk to existing franchisees about the opportunities and challenges that they have faced. At one time they were asking themselves how to buy a franchise restaurant, so their opinions will likely hold value.
If you are interested in learning more about how to buy a Mediterranean restaurant franchise, contact our team today!