Fast Food Franchise: Choose Carefully…..

Owning a fast food franchise can be incredibly profitable. It can also be a nightmare. Just
start talking to different franchise owners,  and you will hear about both sides of the
coin. By simply keeping an open mind, though, you can rake in the profits and escape the
“nightmare”.

Firstly, if you have a premises in mind, look at the passing trade: Who are these people,
and why are they passing? People passing from a nearby parking lot to a hardware store
might not pose a great market, but those same people passing to an office block would be
much more profitable. If you have a franchise in mind, and you are looking for a premises,
be very careful. One block up or down could literally mean the difference between profit
and bankruptcy.

Secondly, talk to other owners from the fast food franchise group you are researching. Do
not simply ask “head office” for some references, as they will just put you in contact with
the owners of successful outlets. You will have to contact owners in similar settings to
the area where you would like to set up shop, and get as much information as possible. Find
out what is the good, the bad, and the ugly. Find out what challenges you have to prepare
yourself for in working with this group, what the standards are, and what the support is
like. You are going to invest a lot of money into this, so be sure to know exactly what you
are letting yourself into.

Lastly, take a look at the franchise agreement. What are the restrictions, and what are
your rights as a franchise holder? Franchise agreements normally require you to buy your
stock from approved suppliers, but what if they are out of stock? And do you have support
from the group if deliveries, or product quality, is not up to standard? What does their
staff, and management, training programs look like? Are you forced to participate in
promotions, or do you have the option to stick to regular pricing to avoid a loss? Are you
protected from another outlet opening down the street? The more details stipulated in the
contract (as long as it is not one-sided), the more commitment you can expect from the
company. If they are willing to put all their expectations AND obligations into writing,
they are likely to “stick to their word”. Vague wording can mean “vague” backup, support,
training…..
Owning a fast food franchise should be a great investment. As long as you ask enough
questions and avoid the common pitfalls, it will be.