Thinking of Franchising a Restaurant? Questions to Ask First
Franchising looks straightforward from the outside. A proven concept, a recognised name, a system that already works. Sometimes that is exactly what it is. Sometimes it is a way of selling someone else’s risk.
These are the questions worth asking before you commit, whoever you are talking to.
Are you buying the right to use a name, or a full operating system? The gap between those two things is enormous.
What am I actually buying?
Be precise. Are you buying the right to use a name, or a full operating system with recipes, suppliers, training and support? The gap between those two things is enormous and it is not always obvious from a brochure.
Where are the numbers written down?
In the United States, franchisors are required to provide a franchise disclosure document. It sets out fees, ongoing royalties, obligations on both sides, and litigation history. Read it, and have a franchise attorney read it.
Be cautious about anyone quoting confident earnings figures outside that document. There are rules about financial performance representations for good reason.
Can I speak to existing franchisees?
This is the single most useful thing you can do, and a healthy franchisor will encourage it. Ask them what surprised them, what support actually looks like day to day, and whether they would do it again.
If you are steered away from that conversation, take the hint.
How involved will I be?
Restaurants are unforgiving to absentee owners. If the plan is to hire a manager and check the numbers monthly, be honest with yourself about that early, because it changes which concepts are viable and it is a question a serious franchisor will ask you.
Does the concept fit my market?
A format that thrives in one city can struggle two hundred miles away. Look at your local competition, your rent, your labour market and your customer base before you fall in love with a brand.
What happens if it goes wrong?
Understand the exit. Can you sell? What are the terms if you want out early? What happens at renewal? These clauses matter far more than they seem to when everything is going well.
Our own view
We would rather have a longer conversation with fewer people than sign up anyone who can pay. If you are curious about what we do and whether it would work in your city, get in touch and we will talk properly.
