June 2, 2020  
 
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Franchising

 

If You Canít Stand the Heat Donít Buy a Food Franchise

Written by Jay Shapiro for Gaebler Ventures

The chicken and the chili dogs are hot but the profits are not. Running a fast food business can be hard work, that's why many franchisors advise that industry experience is preferable before entering into the business.

Buying a fast food restaurant franchise is a good bet for some first-time entrepreneurs to get set up in business.

However, a lack of expertise or industry experience isn't always balanced out by the support offered by the franchiser, even though they have a vested interest in the achievements of the business. While there are advantages, the fast food game isn't always an easy one to play.

Finding and keeping good staff - the key ingredient

Most food outlets require a large number of staff members in order to operate efficiently. The problem with this is that the wage is usually a low one and that can lead to a fast turnaround of employees and therefore an unreliable workforce. Finding good employees and, more importantly, keeping them is a problem the fast food franchisee faces.

Hot costs, cold profits

The fast food industry is highly price sensitive one. There's a very fine when it comes to costs compared to profits. While food franchises do frequently see high revenue it's net margins that get overlooked. There's also the question of food spoiling which adds to costs.

Those expensive starters

Food franchises require substantial investments from the outset. This is because many things need to be paid for up front. We're not just talking stock and staff, there's equipment, premises, waste disposal, furnishings and maintenance costs to consider.

The main course - following brand codes of conduct and operating procedures-

There's no room for adding a personal touch to a franchise business. The brand will dictate your operating procedures and you can't deviate from these. If you are the type of character who likes to inject his or her personality into a project this business probably won't suit you, you'll soon feel creatively stifled when governed by such stiff guidelines.

You get the bill -

When you operate under a known brand name you will be affected by the failure of other franchises. For instance, if a health and safety issue arises at another branch your business may be sullied by it

Chained to the kitchen

When you sign a fast food restaurant franchise contract it's not always easy to get released from it. This might present problems for you especially if you are struggling to make the business work. Contracts often include fairly rigid terms or penalization for early termination.

Still want to run a fast food business? Make sure you can stand the heat.

Jay Shapiro is a freelance writer based in the UK. Jay has a particular interest in the emotive aspects of the entrepreneur's character. "Alongside the nuts and bolts of business, the character of the person is often the ingredient responsible for success."

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Steps to Franchising
Advantages and Disadvantages of Franchising


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