Should you franchise your restaurant?

By Laura Creighton


There are many benefits to franchising your restaurant: expanding your brand, generating more revenue, and from the point of the franchisee, the security of a well-known brand backing you up.

Unlike chains such as Nando’s and Wagamama, franchises are mostly independent from the original business. It takes the onus off the owners when it comes to finding premises, hiring staff and financing the venture.

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Wagamama is one the biggest Asian food chains in the country

All those responsibilities belong to the franchisee choosing to start a new business. They run the business their own way for the most part, only adhering to certain codes dictated by the owner

For example, Subway’s move to Halal foods has not reached all of its franchises, whereas Nando’s decision to do the same is seen across the whole chain.

Nando’s is a well established chain restaurant

This can serve as a great relief for those business owners wanting to expand, but do not have the time or the money to start up a new location – the franchisee does it all themselves and simply pays royalties and advertising costs.

There are disadvantages to this option though – the main business can lose control of its franchises due to not being able to oversee in the way that a chain restaurant can. It also means a business loses charm due to being replicated, with little room for originality.

Leaving managers to decide on certain decisions themselves can lead to issues with health and safety, staffing and finances. This is due to the lack of a clear process laid out in the way it would be with a chain restaurant.

It also means staff do not receive the same sort of benefits they could receive if working in an independent or a chain establishment – therefore not maintaining a sense of brand loyalty or attracting high levels of staff. This could also lead to a high staff turnaround within business.

One small business owner who has chosen not to franchise says he does not plan to expand his business any time soon, as his current business would not necessarily work in another format.

Glen Ashley, co-owner of The Eatery, said: “That sense of community you see in there – you can’t pay for that.

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The Eatery, located in Essex

“If we were to open up another business elsewhere, I would have to train up a chef to make meals in exactly the same way.

“Our chef may see that we have lots of sausages leftover, so decide to make a sausage casserole and put that on the menu.

“In an expanded place it would be more difficult to maintain that sense of innovation and we’d lose some of our creativity.”

Glen says that instead of branching out with more establishments, he decided to focus his efforts on the one restaurant. The Eatery now has a burger van, a bar, delivery, and buffet services.

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Menus for the company’s next door bar, Liquid Lounge

This concept of improving your singular premises inevitably delays the process of expanding through franchising.

It becomes harder and harder to replicate your business with the more you add to it.

It does mean you gain popularity and loyalty with your existing customer base, as you have continued to deliver more and more services to those customers. This is helped by getting to know your customers better.

Glen continues: “People come in here for the environment, for the atmosphere, not just for the food. That is difficult to recreate elsewhere.

“It becomes a question of whether you get bigger within one town or you open out to branch out and do more things.”

Although, there are benefits of having a franchise, including the established reputation enjoyed by the well-known name brand. This has another effect though, which is that the brand could suffer.

If a franchise closes down because it lacks customers, or because it fails hygiene requirements, it always looks bad on the business owner.

Despite a lack of direct control over the individual franchise, people automatically think less of the owners.

For example, if Jamie Oliver’s restaurants fail, he is the one who takes most of the blame as the most visible person in the operation. That damage to a business’ reputation could be fatal when that business is just starting out.

A small business may flourish well without franchising if it is happy to remain small, according to Glen.

Larger businesses may have the capacity to withstand failures at individual branches, making them more likely to do well.

Medium sized businesses are the ones that may struggle more with the demands of overseeing multiple branches, as they would still be in control of a lot of what was going on, making it harder to ensure everything is up to scratch.

Small businesses may find weaknesses when it comes to expanding. Glen says that one way a business goes wrong is trying too hard to impress potential new customers.

He said: “Actually, what we should be doing is rewarding existing customers – the ones that stay with them for years.

“If an opportunity presents itself, or if there is not a lot going on in one town or area, I think it could be the prime area to open up another restaurant someday. You never know.”

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