First, find a mentor in the restaurant franchising industry who can guide you through the early stages of information gathering and through to decision making. They will be able to teach you everything you need to know about getting started in the restaurant business, as well as the particulars of franchising. If you are new to the franchise business, contact several similar ventures and ask them for contact information for existing franchisees in your area.
Decide what type of franchise best suits your needs and abilities. Restaurant franchises range from mobile food to fast food to fine dining. While fast food still garners a large share of the market, mobile food franchises are growing in popularity and profitability. Mobile food franchising is particularly attractive because owners can easily target a variety of physical locations. While one neighborhood experiences increasing rates of foreclosure, a mobile food service could move operations to another area of town which is more economically stable.
Entrepreneurs just starting out in the restaurant franchise industry also need to consider the cost to buy-in and calculate how long it will take to start realizing a profit. Businesses with a larger buy-in will likely have a shorter Return on Investment (ROI). So deciding what type of restaurant to start will depend largely on your ability to make the initial investment vs. the amount of time you can float the business before recouping your cost.
To aid in ROI calculations, ask yourself questions such as:
• In addition to this investment, what major expenses do I have in the next 10 years?
• How long before this neighborhood is built out? Is redevelopment planned?
• What are the key industries that support the local economy?
• What are current trends in home values compared to historical record?
Depending on the available resources to get a restaurant started, you may want to consider partnering with another individual. This will help to increase the amount of resources to start up the business. Although you will also need to share profits, carefully consider your schedule outside of work. It may be worth your quality of life to secure a business partner. It is no secret that entrepreneurs in the restaurant business put in long hours and rarely take vacation or time off. If having a flexible schedule is important to you so that you can occasionally take time off to care for children, aging parents or vacation, a partnership may be your best course of action.
When starting a restaurant franchise also consider what type of liability insurance the company offers. Insurance policies can vary widely on coverage types and limits. Because restaurants and the food they serve can directly impact public health, it is critical to know the coverage offered and ensure any gaps can be filled by supplemental policies, if necessary.
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