EPOS Direct Should you become a Franchise?

Advantages

Established Name

Do you have a name for your restaurant yet? One benefit of becoming a franchisee is that you will operate under the franchise’s name. Potential customers will recognise your name and will know that your food will be of a high quality and that they will enjoy your food. This shows that becoming a franchisee will enable you to encourage a larger number of customers to visit your restaurant. If you register as a franchisee under a well-known name e.g. McDonald’s, you will have a substantial customer base which will lead to more customers visiting your restaurant. This proves that becoming a franchisee will give you the opportunity to significantly increase your sales.

Financing

If you decide to become a franchisee, you will be given financial support to open your restaurant. This will put less pressure on you to raise the funds to open your restaurant and pay for the start-up costs of your establishment. This will give you the opportunity to save your money as emergency funds. When you open a restaurant as a franchisee, the franchise will cover a majority of the costs which will be incurred when opening your restaurant. As a restaurateur, it is important to acknowledge the fact that banks will be more likely to grant a loan to someone who is opening under a franchise’s name. This is because the bank will know that the restaurant will be established so will be guaranteed a certain number of sales. You will also receive support from the franchise which will ensure that you are able to pay back the loan.

Training

Do you receive support? If you decide to become a franchisee, you will receive full support from the franchiser while you are running your restaurant. Whenever you need help, the franchiser will be able to provide you with it. This will ensure that you are able to run your restaurant efficiently which will prevent any faults from occurring with your service. This will give you the opportunity to provide your customers with a high-quality customer service at all times. The franchisee will provide your employees with training. This will ensure your employees can fulfil their job roles professionally which will increase the quality of your customer service. Due to your employees being trained, your customer’s needs will be satisfied which will encourage them to become loyal and regularly visit your restaurant.

Disadvantages

High Employee Turnover

Do you have a large number of customers? One disadvantage is that as a food franchise, you will require a substantial number of employees to ensure your restaurant is running efficiently. If you did not have a significant number of staff, you would be understaffed which would limit the level of your customer service. As a franchisee, you will be unable to pay your employees a substantial wage due to the number of staff you have. This will lead to employees regularly leaving your restaurant as they will be unsatisfied with their pay. This shows that you will struggle to keep employees who are trained. A high turnover rate will disrupt your working environment as you will have to continuously hire and train staff. This will prevent your staff from building relationships with other colleagues which will limit the teamwork of your employees. If your employees cannot work well together in a team, you will struggle to satisfy the customer’s needs.

Pricing

As a restaurateur, it is important to understand that despite being part of the same franchise, not all restaurants will be busy at the same time. The franchise will have control of your prices which will prevent you from offering promotions to boost your sales during your peak periods. This will limit your sales as customers may not want to pay full price for certain products. Due to having no control over your prices, you may have a low profit margin on your products which will severely limit the overall profit that your restaurant generates.

Costs

Do you have personal funds to invest into your restaurant? Even though a franchiser will support you when you open your restaurant, they will not pay for everything. This means that you will still need to invest a substantial amount of money into your restaurant. Even though you are operating under a franchise’s name, you will still require a significant amount of fundraising. Once the restaurant has opened, you still have to pay the overheads of your establishment. As a franchisee, you will have the responsibility of paying royalty payments and marketing costs to your franchiser. This shows that even as a franchisee, there will be a substantial number of costs that you will have to cover. As a restaurateur, it is important to understand that despite being a franchisee, you will still struggle to generate a sufficient profit during the early stages of your restaurant. Would you be successful as a franchisee?