Restaurants are no longer the only food-based business types that are seeing continuous growth today. The food chain franchise sector has grown so much since it began in the United States, with White Castle arguably pioneering the industry.
Today, fast food chains like McDonald’s, KFC, and others have expanded beyond the U.S., bringing the sector to an all-time high. These names, which are now used daily in almost every household around the world, have made a mark that will be remembered for the foreseeable future.
But with its rapid growth comes the challenge of doing business in failing economies. Although the industry itself is doing well internationally, having a food franchise business doesn’t guarantee success.
Even so, the dream of creating household names remain. Business owners believe that with the right concept, this type of expansion strategy is undoubtedly a viable option.
If you’re looking to achieve food business success, it is crucial that you know how to do it right. To help you out, here are three steps you can follow to establish a winning food chain franchise:
Step #1: Check Your Business’s Readiness
As mentioned earlier, franchising a food business isn’t an automatic win. This is because you still have to check whether the company you plan on launching is ready for it.
That said, it is crucial that you monitor sales records and ascertain the profitability of the existing business. You can do this by assessing several factors, including:
The Franchise Concept
A good franchise concept offers services or products that are both familiar and unique at the same time. Familiarity offers customers a sense of comfort while the added twist differentiates your company from competitors.
Also, it is crucial that the concept appeals to end customers, who consume the food, and potential franchisees, who will serve as your partner in the success of the brand. It should also be able to push for higher profits than what is already being yielded as well as provide a systematic replication of the brand to be franchised.
In short, you should ask yourself whether the concept is sellable, can be cloned, and can yield good returns of investment.
Financing and Market Research
A considerable percentage of franchise success is attributed to its profitability as a one-branch business and its replication in other locales. Companies with at least several profitable units aside from the first one that is already in operation have a good shot at successfully franchising the brand.
Aside from the financing side of the franchise, you should also take a look at your target market. This means that you must conduct market research on consumer demand beyond the boundaries of your existing business as well as potential room in the competitive marketplace.
Step #2: Get to Know Your Business Model
To take your concept farther, you must also have a business model that can take your company there. Come up with a value differentiator unique from the rest. Once you develop this, make sure to train yourself to be the best at it.
And as you make sure that all legal documents are ready, you must make crucial choices about your business model. Among the key points you should consider are:
- Franchise fees and percentage of royalty
- Franchise agreement term
- Territory size for each franchisee
- The geographic area where you offer franchises to
- Training programs offered to prospective franchisees
- Policies on the franchisees’ products or equipment sourcing exclusively from your company
- Net worth and business experience potential franchisees are required to have
- Your marketing strategy for the franchise
- Choosing between having an area/master franchisee to develop multiple units from and allowing an owner-operator per unit
Aside from these, it is also crucial that you consider variables related to the location of your franchisees, including local regulations, territory size, and even the weather.
You must also make sure to plan how to ensure franchisees can deliver the same quality of food and service you have in your original food shop. This means you have to come up with a way to provide your franchisees with the right know-how in implementing tasks, like preparing food and using a franchise management system, to ensure that they can live up to your name and the brand’s reputation of operating seamlessly and delivering excellent service.
Step #3: Register as a cc
After planning and preparing a concept and a business plan, it is time for you to put it all into writing and setting the plan in motion by officially applying as a franchisor. Once you complete your legal paperwork, you must submit it to the respective authorities governing your country.
A Continuous Process
Building a franchise doesn’t end the moment you become a legal franchisor. You still need to perform more critical tasks like hiring the right talent for the job, marketing your franchise, and supporting your franchisees continuously. After all, success is not a one-shot deal.
Ahmad Alzaini is the co-founder and CEO of Foodics, a fast-growing foodtech startup. A businessman by nature, Alzaini is an app aficionado, developing businesses in Saudi Arabia within several industries. Today, Foodics has extended to new markets across the MENA region, processing over 1 billion transactions, and offering the latest technology in POS and restaurant management.