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Buying a Restaurant Franchise

Buying a Restaurant Franchise

Do you have what it takes to be a successful restaurateur? Our franchise expert offers some words of wisdom.

Jeff Elgin | Entrepreneur Magazine

There are many different types of business format franchises, but when most people think of a franchise business, their first thought is of food. The success and growth of the many big brand-name fast-food franchises makes this a logical first stop in the thinking process.

When evaluating restaurant franchises, you must focus on the characteristics of the business from a franchisee’s perspective to determine whether this industry is the right one for you. There are some wonderful advantages to having a food business, but there are also some challenges you need to be aware of before proceeding in this industry.

In assessing a food business, the main advantages are typically considered to be:

  • Built-in Demand. Consumers have been trained to look for franchise food outlets, which can represent a big advantage for a startup. You need to make sure the product offering of the food franchise has “staying power” in the marketplace rather than being a fad or fringe product.
  • Ease in Financing. Traditional lending sources are very familiar with the real estate and equipment needs of a prepared food operation, which may ease the challenge of obtaining startup financing. These sources also like the relatively high revenue production of a typical food franchise.
  • Track Record of Success. Many food franchises have multiple units and have been operating for a while, making it fairly simple to determine and verify their track record of success. That can help you make an informed decision about the business prior to getting involved.
  • Prestige. Whether valid or not, many people associate a high degree of glamour with a person who owns a food franchise business. The fairly high degree of status associated with this occupation is important to many prospective franchisees.