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National Restaurant Association - To franchise or not to franchise: Gauging your next step

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To franchise or not to franchise: Gauging your next step

Thinking about growing your restaurant business? According to iFranchise CEO and 2015 National Restaurant Association Hotel-Motel Show education session speaker Mark Siebert, you should create a win-win plan before setting out to franchise.

To determine if your business is fit for franchising, ask these four questions:

Will it sell?

You can’t franchise something that’s just a great idea; start with a successful, operating prototype. Key selling points include credible management with foodservice backgrounds, differentiation from major marketplace competitors, a “sizzle” element that draws people to your brand and, ideally, queries from parties who admire your business and are interested in buying a franchise.

Can you clone it?

Franchising is essentially duplicating something that’s already working. In order to efficiently duplicate your restaurant, write down your business’ systematic processes, and assemble that information in an organized, thoughtful, easy-to-follow operations manual. The more teachable your restaurant is, the more likely it will translate well in a franchise format.  For instance, if you have a complex restaurant menu that requires a specialized chef, it’s going to be more difficult to duplicate than a concept with a more straightforward menu.

What about R.O.I.?

Examine sales-to-investment ratios, food costs, labor costs, your overall prime costs and other figures important to affordability. This will give you an indication of whether you can sell your concept and get a franchisee a good return. Profitability is critical, too; after all, you’re looking to expand your business. Aim for an R.O.I. of at least 15 percent.

Will it succeed?

To stay afloat, you need to take a hard look at market trends, capital and management’s skill levels. High-quality management teams can positively impact market trends and capital. 

 

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