A food business is one of the most lucrative businesses you can ever start because it promises a high return on investment if managed well. If you do not wish to start it from scratch, you can enter into a food franchise agreement. A food franchise is a legal agreement between a restaurant owner (franchisor) and restaurant operator (franchisee), allowing the latter to open a restaurant using the owner’s brand name.
Food franchise restaurants have continued to mushroom, but why are people attracted to them? Here are three reasons why you should consider opening a food franchise restaurant.
1- Brand Recognition
A food franchise restaurant will operate under a renowned brand name. You will get instant brand recognition as a franchise holder, thus significantly boosting your business performance because customers already know your brand. Customers will automatically know what your business deals with and what to expect from it. Therefore, you will need to do very little about brand marketing since the brand name is already established in the market.
Some food companies have strong brand names and are therefore highly respected in the market. Some of these restaurants are boasting a high customer base. If you become a franchise holder of such a brand name, you will tap into its already established customers’ loyalty which will, in turn, increase your revenue base.
2- Business Assistance
You can count on receiving assistance from your franchisor to help you establish the restaurant. Depending on the terms of the agreement, the franchisor will assist you in streamlining your operations so that they are in tandem. Although the franchisor will not necessarily help you with everything, they will ensure that you receive guidance in critical areas. For example, they can provide you with a knowledge base on important aspects of their business, advertising plan, supplies, or equipment where necessary.
The franchisor will also provide you with the necessary training to help you understand how to run your restaurant successfully and improve customer experience. In case you encounter any challenges along the way, the restaurant franchisor will guide you on how to overcome them. It is in the franchisor’s best interest to safeguard against reputational risk, and hence they will try as much as possible to offer the best assistance. It would be a different kettle of fish if you start a new restaurant from scratch since you would have to figure things out on your own.
3- Lower Risk
There are significant risks for starting a business from scratch. It takes time for such businesses to gain traction. A sizable number of businesses collapse a few years after inception due to mismanagement or lack of know-how to run it. Operating a food franchise restaurant reduces the risk of failure significantly. Since most franchises have a large network and are owned by established companies that use tried and tested business models, the risk of failure is low. The lower risk means that the restaurant can operate profitably. With low risk, you can easily access loans from lenders to expand your business.