Should You Buy a Restaurant Franchise?

January 19, 2013

Restaurant Franchises

If you’ve looked into franchises, you’ve probably heard the arguments in favor of buying a franchise. You get to partner with a proven brand. You get marketing support. You benefit from their ad fund. You get help selecting a location. When it’s coming from a good franchise salesman, it can be pretty tempting.

But should you invest in a restaurant franchise? The answer is a giant “MAYBE”. That’s not to say we can’t help you make a decision, though.

First off, ask yourself whether you consider yourself more suited to being an entrepreneur or a business manager. Do you want to create a business, or do you want to RUN a business? Generally speaking, most entrepreneur-types are unhappy as franchisees. The level of support and guidance (and restrictions!) coming from a restaurant franchise can be overwhelming and smothering for a true entrepreneur. If you prefer to make fewer decisions and focus mostly on running your business according to a pre-existing formula, however, a restaurant franchise may be perfect for you. In fact, several franchise recruitment specialists have told me that the best franchisees are often those who come from jobs where they worked for a boss. Owning a franchise gives them the additional freedom, control, and investment benefits they desire, but it doesn’t force them to reinvent the wheel and spend years finding a profitable business model.

Even if you’re pretty sure franchising is right for you, there’s a huge difference in the quality of opportunities and their suitability for your personality and  your local area. Let’s go back to the list of benefits we talked about.

One of the most common things restaurant franchises will tell you is that you’re getting a proven brand. In some cases, this is true. Nobody’s going to deny that a brand like McDonald’s or Pizza Hut isn’t proven. Many small restaurant franchises are also proven in their local markets. However, many other franchises without solid track records will also try to use the same arguments. It’s up to you to do a little research about the restaurant franchise you’re considering. Read all their disclosure documents, contact some current franchisees if possible, and go some thorough Google searching about franchisees reviews and opinions. Go past the first page of results, too. Many restaurant franchises employ online reputation management specialists to help them bury bad publicity in the search engines by ranking good or neutral articles over the negative ones.

What about the promised marketing support? Some restaurant franchises are great, and they’ll advise you on what works best for different types of locations and different times of the years. They have solid marketing teams and they pay close attention to what’s working and what isn’t. Other restaurant franchises are virtually useless, doing little more than advising franchisees to issue more coupons and buy more ads. You should also check to see what kind of online presence the restaurant franchise has. If you search for relevant phrases, do they come up on the first page of results for your area? Does their franchise website have individual location pages? Are they listed on Google Places? What’s their Facebook presence like? Compare your findings to similar restaurant franchise systems.

In the end, much of the decision to purchase a franchise comes down to personal preference. However, if you decide that franchising is right for you, be sere to do your research and make sure the restaurant franchise you choose lives up to its promises.

 

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