Any entrepreneur who wants to engage in the restaurant business is doing everything possible to avoid losses and bankruptcy. At the same time, the promotion of a new and previously unknown institution is an incredibly complex matter, which does not always lead to success. To reduce the risk share, it is better to use offers from the largest players in the restaurant business. Competent entrepreneurs open institutions under a popular brand, namely, use a restaurant franchise.
Restaurant Franchise and its features
Nowadays, catering establishments operating on the principle of a franchise are increasingly opening up. The payback period of these cafes is 1.5-2 years, which is unlikely to boast of newly opened establishments, some of which start to work successfully, and the rest close, not meeting expectations. Keep reading profitable small farm ideas.
It should be understood that the restaurant franchise does not mean buying a popular brand. It allows the institution to work using the goods and equipment of the franchise. All other details should be regulated by a special agreement. For the use of the brand, you will need to make a special contribution and each month to pay a commission in the amount of 2-7 percent of income.
Advantages and disadvantages of a restaurant franchise
For any business is characterized by both advantages and disadvantages. The obvious advantages are that thanks to the franchise there really is a great opportunity to open an institution under a popular brand. All this guarantees the success of the business. It should be understood that not every trademark is known to the consumer, however many brands are still recognized as recognizable in large metropolitan areas.
The organization of restaurant business according to the principle described above does not imply the need to develop a project. Moreover, the franchisor will necessarily give recommendations and a number of important consultations at the development stages of the establishment; will propose an optimal discount and bonus system for subsidiaries. The franchisor is engaged in staff training, providing raw materials and equipment for the manufacture of dishes.
The key disadvantage of a franchise is the need to invest large amounts of money at the beginning of business development. In addition to the lump-sum fee, the entrepreneur must pay the costs relating to the rental of premises, the purchase of goods, equipment. You also need to get fire certificates, the conclusion of SES and a number of other administrative documents.
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A cafe or restaurant that opens under a popular brand has some limitations. For violation of the rules prescribed in the contract, a fine may be imposed on the company or the deductible altogether withdrawn. Controversial issues and scandals associated with the reorganization or bankruptcy of the main company usually have a very negative effect on the subsidiaries.
Stages of opening franchise places
As mentioned earlier, the opening of the institution on the terms of the franchise will require substantial investments in financial terms. Therefore, if you carefully calculate investments and other stages, you will significantly reduce the percentage of risks.
We can distinguish the following stages of opening a restaurant or cafe franchise:
- Develop a business plan. The projects described above imply careful calculations and clear, precise actions. The document indicates not only an estimate of finance but also lays a number of risks, prescribes time limits. In the case of opening on the terms of the franchise, there is already a rough project business plan. All that remains for an entrepreneur to do is to make a number of adjustments, discuss the nuances with the boss.
- Search for premises and signing a lease agreement. At this stage, the entrepreneur must consult with the franchisor about the peculiarities of renting space for a cafe or restaurant.
- Creating the image or design of the future institution. When a franchise is received, this item is fully provided by the owner of the brand.
- Acquisition of equipment, utensils and other tableware.
- Obtaining permits.
- Personnel training, its search, and selection.
- Purchase of food, drinks.
- The opening of the institution.
Even if you go through all the above steps, this will not be an absolute guarantee of success, but it will significantly lower the risk of bankruptcy.
How much does a franchise cost?
The most important role in the opening of the institution is the cost of the franchise. There are many small firms on the market that offer it at a high price. However, there are such companies that are ready to provide the brand at an adequate price, but later it turns out that it is necessary to pay interest, which constitutes a significant part of the revenue. From a long-term perspective, this is unlikely to be beneficial. However, most reputable companies are aware of the advantages associated with opening a new establishment in their network, so they specifically lower the cost of opening a franchise.
Thus, entrepreneurs wishing to open a cafe or restaurant, but who do not have experience in this area, will find it much easier to buy a franchise to create a successful business. The main thing is to find a good franchisor offering reasonable prices and favorable conditions for cooperation.
