It is never straightforward to franchise a business for the mutual benefit of the franchisor, franchisee and with adequate brand protection.
Generally, restaurant franchises fall into 2 categories – the big brands with which we are all familiar such as McDonald’s, Costa Coffee and so on, and the other being businesses that are growing from the ambitions and capabilities of their original founder.
The catalyst to franchise the latter is usually that the entrepreneur has relatively limited financial, management or support staff resources, and recognises that it is difficult to rapidly scale up unless they surrender some control to investors or borrow heavily.
A challenge in the hospitality sector is that the market is open to immediate customer feedback – both good and bad!
In hospitality, many customers are served day-to-day and if you multiply that across the number of outlets then there is the potential for poor service or quality of food to be rapidly highlighted.
Intelligent potential franchisees, or customers, will pay great attention to social media comments and so it is particularly important to start with a brand that is well regarded by its client base, and then ensure by control, encouragement, motivation and monitoring that the network follows the laid down processes and protocols.
Franchising a restaurant takes place through three distinct stages:
1. Blueprinting your restaurant franchise
This first stage enables you to understand in more detail what will be required of you as a franchisor and the business to be replicated successfully.
We strongly recommend that a potential franchisor does not acquire a franchise agreement from another restaurant concept or business and then attempt to adapt it.
There is no guarantee that the agreement was properly drafted in the first place or that it actually reflects what the franchisor intends to happen within their own business.
2. Developing your restaurant franchise
From here you move into the development phase. A lot of detailed planning and preparation takes place prior to being ready to launch the franchise into the marketplace.
It is important that as a franchisor, to makes early decisions around some of the following key issues:
- Do you have secret recipes? If so, will the product be supplied by central prep for completion at the restaurant?
- If all cooking is to take place fresh on the premises, then how will quality be maintained?
- Will your brand be very clear about what can and cannot be on the menu or will you offer flexibility? And will the menu change over the course of the seasons?
- How will you, the franchisor, check the quality of what is happening in the restaurant?
- You should provide the architectural and design assistance around the location.
- It is key that the premises reflect your wishes not only through the fit out but also through the quality of furniture and equipment. Franchisors should be very specific.
- The franchisee often does not know what it is they are required to have and so you should provide a detailed inventory/equipment list.
The legal agreement also governs your relationship and ultimately may be required in the event of a significant breakdown in the relationship.
It is there not only for you, but also for the franchisee, because it sets out roles and responsibilities for both parties.
Nobody wants to see brand contagion from improper behaviour by a ‘rogue’ franchisee. The legal agreement also sets out very clearly some vital matters such as:
- Trademark protection
- Territory allocation
- Right to renew
- Right to control the menu, controls over ingredients and product
- Obligations around data protection and CRM
- Post-termination clauses
- Governance of deliveries
3. Recruiting franchisees
The third phase, recruitment, occurs at launch and is the key aspect – it is one thing to have a great concept – another to be able to present it and articulate it in such a way that it encourages potential franchisee interest.
Nowadays you have to be on top of your game in presenting your case to potential franchisees, which means that the brand and franchise proposition offered must be compelling.
Having succeeded in attracting initial interest, it is vital that budding franchisors understand exactly how to progress that enquiry through to the point of signup.
This is where the combination of thorough research, planning and the knowledge of experienced consultants who have worked with a wide range of brands and seen many types of concepts work perfectly to support an enthusiastic and successful restaurateur entrepreneur!
This post was written by Ashtons Franchise Consulting. They are an exhibitor on the FranchiseShow247 Franchise Advice & Support floor. You can visit their FranchiseShow247 exhibition stand here.