Fast food franchises remain a perennial favorite among those looking to invest in the franchise world. While they may have relatively high net worth and capital requirements, they belong to a stable industry know for producing a steady stream of profit. If you have ambitious entrepreneurial goals and are ready to consider entering the fast food world, here are several bits of advice to help pick the right brand to buy:
- Examine Your Own Finances:
- Research Your Local Market:
- Pick a Strong Program:
- Study Supply Chain Management:
- Know what Branding is Up to You:
- Set Up a Grueling Schedule:
Your own financial assets and net worth are key players when first picking a fast food (or near-fast food) franchise. Not only are high initial costs involved, but franchisors take a close look at your net worth and your liquid assets. One or two million dollars in net worth is often required for the bigger brands, with up to a million dollars in liquid assets. You may also need to bring some experience to the table. Financing options are frequently a possibility, so examine your current credit condition to see if you could qualify for a financing agreement to help shoulder some of the initial expense. Create a contingency plan if the business is just not successful or if you need to sell in the coming years.
The local conditions are always important to franchising, but they have a special impact on fast food. What type of fast food does your local market already support? Are customers willing to try new things, or do they prefer strictly traditional styles of fast food burgers? How is the market saturation level? Ideally your market should have enough room for a new player – and this includes physical room. Take a close look at locations to see if any high traffic areas could be open to a new franchise location.
Of course your should pick a brand that has plenty of potential earning power, with enough innovation or recognizability to draw new customers that already have fast food preferences. But also remember to pick a franchise that has a great program for you. The franchisor should offer extensive training for managing its brand and its logistics. Employee training, management issues, operations…everything should be fully covered. This includes training in marketing and a source of marketing materials to use. Your contract will go over this information in depth, but ask for the details before you reach the contract stage.
What do operations for your fast food business require. Restaurants that have high inventory turnaround need to master their supply chains in order to succeed. In many ways franchises already start out with a supply chain advantage, but as the owner you need to know your supply chain inside and out too – or risk running out of popular menu items and annoying customers. Study supply sources, shipments, order processing, and the flexibility of your logistics to understand the best way of operating.
That marketing training that the franchisor offers should make it exceedingly clear what marketing materials and instructions are provided or required, and what is up to you. You should know if you can branch out on your own, what discounts you can personally offer, and what kind of business or social media presence you can have. Some franchisors provide a marketing fund and some do not but either way you should start planning a personal budget for marketing endeavors early on to control spending.
Fast food is a rough business. You may be able to hire employees part-time to work in shifts, but as the owner you will always be on call for emergencies and management. This means working in the middle of the night, on weekends and during holidays. Expect this early on and arrange your schedule accordingly to see if you can live with it.
Isaac Morris is a professional blogger that provides tips and information on franchise opportunities and investments. He writes for FranchiseExpo.com, the place to find the best franchise opportunities available.