Are you considering the world of food franchises as the empire you’ll preside over? Good thinking! Banking on household name recognition and a proven operating system is a wise choice for a new franchising business. However, there are many types of franchise opportunities in the food industry, running the gamut from fast food franchises or donut shops to gourmet steak-houses and fine dining establishments, yet there are pros and cons to choosing the food industry for your new franchise.
There are many advantages to buying a food franchise. The main advantage is that successful branding and business planning are already in place, just waiting for you to work their magic. You’ll have a very professional support staff personally invested in your success, since the triumph of a new franchise naturally means more capital and prestige for the corporate franchisor. Market research is easy since you can walk across town and inquire as to the success of other units.
You’ll also enjoy a low risk of failure, as only 5% of franchises fail (compared to 90% of new small businesses). Another advantage is that your food products will have demonstrated staying power in the market, guaranteeing you years of healthy business. It’s also easiest to get financing options for an industry characterized by high returns. Lastly, there is a certain pride in owning a food franchise, which has become a symbol of Americana and a staple of our cultural landscape.
However, there are some dangers in food franchises as well. First, you need to consider the labor challenges you may face. The high turnover rate of low-wage employees is often overlooked but it can have a dramatic impact on how well your business is run and how satisfied your customers are. Recruiting and retaining capable workers is more of a challenge with fast food franchises than restaurant franchises, but with the latter you’ll be paying higher wages. Also, the profit margins are fairly low for a fast food franchise because the prices need to be kept low to compete. With restaurant opportunities, you’ll be making more, but not by much because you’ll also need to be investing more to get gourmet products and quality workers.
So how do you know if food franchises are for you? After considering all the pros and cons, you may still feel uncertain. Shadowing a food franchise owner for a few weeks may be the best way to know for sure if you can hack the day-to-day operations. While this commitment may seem tedious, it’s an essential part of the process before investing your hard-earned money into a franchising business.