The restaurant business is a very demanding and rewarding industry. However, it would help if you put a lot of effort into establishing and making it successful.
Moreover, if you follow any successful brand and want to invest in a franchise restaurant business or want to open your restaurant, then choosing a franchise restaurant is a good option as it is already successful.
Understanding the Costs and Benefits of Franchise Restaurant Ownership
The franchise restaurant business is the fastest growing in India, and many people are investing in well-established brands to earn money. So, if you are also looking forward to starting a franchise business, but don’t know how to open a franchise restaurant, then here is a step-by-step guide to help you get through this.
What Is A Franchise Restaurant Business And Its Benefits ?
A franchise restaurant business is a type of business where restaurant owners allow their restaurant business rights and operations to the franchise. Moreover, buying a franchise means buying rights to have your restaurant, and to use the name, material, and brand value of the actual owners to run the business.
Moreover, there are multiple benefits to opening a franchise business
- There is no need to brainstorm for concept development, you already have an established concept.
- Get access to brand recognition and brand value from the start of your business.
- Get training, and marketing support along with operational guidance.
How Much Does It Cost To Start A Franchise Restaurant Business ?
If you are planning to start a franchise restaurant business, then it’s necessary to know the ongoing charges and costs of running a franchise business. Moreover, it’s important to understand the charges involved in running a franchise restaurant to maintain the profit in business. The charges include:
- Royalty fee – You need to pay the royalty fee on a weekly or monthly basis. In addition, it ranges from 4 % to 8% of the gross sales of your restaurant.
- Marketing fee – Franchise restaurants need to pay for a national marketing fund that is used for advertising and marketing campaigns of all the franchise restaurants under one brand. It may require 2% to 5% of total sales.
- Operational cost – There is a large amount of operational cost required to open a franchise restaurant as it requires labour costs, inventories, utilities, and others.
- Renewal fee – Renewal fees vary on different franchises. Most of the franchises have decided on renewal fees, while some have a policy to renew the agreement once it expires.
Thus, overall startup costs along with liquid assets for the franchise restaurant business may be charged ranging between $100000 to $ 1,000,000.
How Do You Start A Franchise Restaurant ?
Starting a new restaurant business needs to do proper planning and efforts to execute it successfully. Moreover, if you want to start a franchise restaurant, here are details on how to open a franchise restaurant.
Market Research And Analysis
If you step into the restaurant business, it’s important to understand the market and your target audience. Moreover, research helps you get an idea about the niche selection. In addition, analyze the market and the demand of the target audience to get an idea of how you need to perform better and be unique in the market.
Select the niche
Once you read the market, choosing and identifying the niche you want to start your business is important. Moreover, it’s beneficial for your restaurant’s success, if you choose the niche that is in more demand in the market.
Choose The Right Franchise
Before selecting the right franchise for your restaurant business, you need to decide the type of business model that will be best for your business. It includes:
- Master franchising – In this, the major franchisor transfers the franchising control in a specific area to the person and then controls the area other than that.
- Single unit franchising
- Multi unit franchising
- Company-owned franchising
Once you know which franchise model you want, it’s important to select your franchising restaurant. In addition, there are a few things you might consider before finalizing your franchise restaurant. It includes:
- Does the franchise restaurant match the concept you want for your business?
- Which restaurant cuisine is in demand and what needs to be introduced?
- Are your idea and your franchisor’s ideas and values compatible?
Plan Your Finances And Investment
Once you choose your franchising restaurant, you need to plan the finances and investment you need to buy the franchise and run the existing franchise. The initial franchise fee may range from $45,000 to $ 90,000 depending on the type of franchise. In addition, there are additional charges and ongoing costs that you need to pay while running a franchise restaurant. To invest in the franchise restaurant business, you can go for any financing options that include:
- Borrow money from friends, family, and relatives.
- Money from any government schemes.
- Own savings
- Bank loans
- Investors
License And Documentation Required
Once you have planned your finances to start a franchise restaurant business, you will need a government license to start any food business in India. Moreover, there will be some expenses to go through the documentation and license process. The required list of documentation and licenses for your food business is:
- Trade license from Municipal Corporation of India (MCI)
- Liquor license if you want to serve any
- Franchise disclosure document (FDD)
- No objection to a license
- Pollution control license
- Professional tax license
- Business Registration
- Fire safety license
- GST registration
- FSSAI
Select a Location
Location plays an important role in attracting customers to your restaurant. Moreover, choose the location based on your market research and also that fits the demographic requirements to open a restaurant business given by the franchisor. In addition, the location should be easily accessible to the customers and have plenty of parking space.
Hiring and Training of Staff
Hiring the right individual and giving proper training is necessary to maintain the brand standard of the franchise restaurant. Moreover, the franchisor offers service to train and guide the entire staff including the head chef and waiters.
However, if it’s possible the training and recruitment should be done before you start the franchise. In addition, some of the franchisors train the staff before opening any new outlet and offer hands-on training to staff in the existing running outlet. The initial training is sponsored by the franchisors and you need not pay for the staff training.
However, if you want additional training for your staff, then you might be charged with additional costs. Sometimes, the franchisor recruits their old staff in the new outlet to train the new employees.
Support from Franchisor
While paying for franchise fees, there is support provided by the franchisors. However, there should be a clear description of the support offered by the franchisor to avoid confusion.
Moreover, some of the franchisors offer support such as infrastructure development, staff training, operational management, and POS systems. Whereas, some also offer raw materials in the support package. But, if there are any additional services or specialized support and consultation, then you may be charged an extra amount.
Marketing of your Franchise Restaurant
Marketing is crucial to the success of any restaurant business whether it’s a franchise or wholly independent. Advertising your new franchise restaurant brings more customers, increasing the profit of your business.
Moreover, franchisors offer help in marketing like organizing campaigns, and strategies to attract and retain customers.
In addition, they also offer effective grand opening promotions to make sure a large customer base gets to know about your restaurant franchise. There are following ways to market your franchise restaurant.
- Make a social media handle for your franchise restaurant and market your upcoming restaurant.
- If you have a little more budget, you can invite local influencers that attract a large customer base.
- Display ads on social media handles and offer various discounts and coupons.
Conclusion
Starting a restaurant business is very challenging yet exciting. Moreover, the food business is a fruitful business where investment always turns out to be profitable. If you are into the restaurant business, there are a lot of options you can look into, including opening a new restaurant business of your own, opening a franchise restaurant business, or renovating an old restaurant. Every type of restaurant business will give you profit.
However, if you wish for the establishment of restaurants in the market in its initial days, then what’s better than starting your restaurant franchise business? So, if you are thinking of starting a restaurant franchise business, but have no clue how to open a franchise restaurant business, then the above-mentioned step-by-step guide will help you.
Moreover, you need to research the market and select any franchise restaurant in which you want to invest in.
In addition, you need to complete all the documentation to purchase the franchise and get the process of opening your dream franchise restaurant started. All you need to do further is choose the appropriate location and get the inventories, raw materials, staff, the best POS system, and effective marketing strategies to start the franchise restaurant business.