Thereâ€™s no doubt that investing in a fast food franchise could be a lucrative decision â€“ fast food franchising is, after all, a $125 billion dollar a year industry. However, buying a fast food franchise requires a lot of hard work. If youâ€™re thinking of becoming a fast food franchise owner, you should consider following these key steps:
1) Know your financial situation, skills and interests
Ask yourself: why does owning a fast food franchise appeal to you? Are you willing to sacrifice a large amount of your time â€“ including evenings, weekends and holidays â€“ to this endeavor? You can instantly save time and money by narrowing your options to whatâ€™s affordable.
2) Do your research!
Once youâ€™ve got the basic idea about your financial situation, dig deeper. Take a look at the franchisorâ€™s UFOC/FDD materials, especially the financial statements, and interview current and former franchisees: Are they satisfied with their earnings and franchisor support?
3) Consider the market
Taste is a regional preference â€“ which means that a food concept that is popular in one area may not be popular in another. Also, you are more likely to find a niche concept in dense, urban centers than in a small town in the Midwest. Consider your competition, as well: if your target market is saturated with restaurants remarkably similar to yours, you might want to consider a different concept.
4) Location, location, location
It is crucial to your success as a franchisee that you select the prime location for your operation. You would severely limit your earning potential, for example, if you locate in an infrequently traveled area or at the back of a strip mall. If youâ€™re the only game in town, perhaps you should locate near a major freeway or highway heavily trafficked by truckers etc. â€“ that way, youâ€™re sure to get some business despite a potentially remote location.
5) Secure your franchise financing
You will most certainly need financing once youâ€™ve made your franchise selection. Numerous options are available to you, including conventional bank loans, home equity loans and SBA guaranteed loans. Additionally, some franchisors offer in-house financing, and some franchises â€“ less expensive ones, such as home-based business franchises â€“ charge the franchise fee on a credit card.
6) Attend training and hire staff
You will need training and an operating manual in order to run your franchise business. Franchisors generally provide some sort of training, but, depending on your franchise concept, you may need to hire a staff yourself. Be sure to post sign and run an ad advertising openings prior to opening your business.
7) Obtain necessary permits and insurance
It is likely that you will be required to apply for various federal, state and county licenses and permits. As far as insurance is concerned, each industry has its own unique requirements. You can find all this information in the Franchise Agreement.