Opening a restaurant has become a top endeavor amongst optimistic entrepreneurs. While this venture can be enticing, it’s also rife with challenges. Nearly one in every three restaurants will close its doors for good only three years after opening, and building a new restaurant business from the ground up can be an expensive and stressful challenge. That leads many entrepreneurs to turn their sights on franchises. Purchasing a pre-existing business can relieve some of the responsibility and stress that accompanies a startup restaurant, but it’s not to say this venture is a walk in the park. Take the following aspects of the business into consideration before taking the leap.
Securing the Capital
If you haven’t already heard, opening any type of restaurant is an expensive endeavor. While it’s generally less expensive to purchase a franchise than to start your own restaurant, there are plenty of costs to prepare for. If you don’t have the personal capital to invest, you’ll need to consider financing options. Will you apply for a loan? Perhaps you’ll try your hand at the popular restaurant crowdfunding option that’s beginning to saturate industries of all types. Luckily, it’s easy to get financing for a franchise than it is for a startup. Why? Proven success. The proposed business has already proven its worth, meaning investors are facing less risk. While costs vary depending on franchise and location, be prepared to spend hundreds of thousands of dollars, if not more.
Buying a business isn’t necessarily as straightforward as it may seem. You’ll still need to put in the time and research necessary for legal regulations. Because the restaurant industry deals with strict, rigid governing policies, you’ll need to remain on top of the legalities related to your business. You may consider putting a legal counsel on retainer as you get your business started.
It’s important to plan ahead and give yourself a large window of time during which to apply for and secure the necessary government permits. Beyond zoning issues and food permits, there are other stipulations to keep in mind. If you plan on serving alcohol in your franchise, you’ll also be required to apply for an alcohol permit. In some areas, this will cost you a fortune. Because alcohol permits are limited in certain areas, you’ll be hard pressed to find varied types of liquor licenses for purchase, and when you do hunt one down, may find yourself paying an arm and a leg. Demand exceeds supply, meaning you should brace yourself for paying possibly hundreds of thousands of dollars for the most extensive alcohol permits.
Choosing the Right Franchise
It’s important to put the right amount of thought and research into the type of franchise you’re hoping to open. As you browse, look for a franchise opportunity that offers a strong support system. The best franchises will provide entrepreneurs with a variety of resources that can be used from conception to completion and beyond. For your first franchise purchase, it’s wise to pick from established, successful brands that have a history of profitability. Sticking with what you know means securing your future.
Your Responsibilities as a Franchise Owner
You’ll be laden with a plethora of responsibilities after acquiring your franchise. Tasked with staffing your restaurant, maintaining capital flow, and marketing your new business to local patrons, you’ll find your time is completely filled. Don’t consider your franchise to be a hands-off venture. Many times you’ll find you’re the first one there in the morning and the last to leave in the evening. If you’re looking for something that doesn’t take up the bulk of your time, a franchise probably isn’t the best bet. If you’re ready to invest the time and effort into franchising, however, you can stand to make lucrative gains and set yourself and your business up for long term success.