In the third, and final, edition of our series revealing advice from this year’s QSR Best Franchise Deals Council, we tackle the question, “what would you advise any potential franchisees looking to get into the space on what they should be looking for in a brand to invest in?”
The first two articles, on challenges and opportunities and what’s separating winning franchisors, respectively, can be found here and here.
Jonathan Hill, cofounder, Morrow Hill
If you’re looking to dive into the franchising world, there are a few key things you should consider to ensure you make a smart investment. Start by evaluating the brand’s reputation and market position. You want a brand that’s not just well-known, but also positively regarded and steadily growing. Research its history, track its growth, and see how well it adapts to market changes.
Next, take a close look at the support and training programs the franchisor offers. A strong support system can make a huge difference, especially if you’re new to the industry. Be sure to choose a franchise that offers strong guided support and will assist you with items such as securing real estate, marketing, employee training, build-out, etc.
Finally, stay on top of market trends and consumer preferences. The best brands are the ones that are future-focused and ready to capitalize on emerging trends, whether in technology, food choices, or service delivery. By keeping these factors in mind, you can make a well-informed decision that aligns with your financial goals and personal aspirations.
Marcia Mead, president, M Squared Franchise Consulting
If my brother asked me which restaurant franchise he should purchase, I would advise him to consider his due diligence carefully including fully understanding the brand’s strength and reputation, information included in the FDD, validation with franchisees to understand profitability and “day in a life,” training and support, corporate culture, mission, and values, menu innovation, and technology integration and automation.
Matt Martin, CEO, RocketBarn
I would advise potential franchisees to start with assessing what you are personally passionate about. If you are able to find a handful of successful brands that you can imagine yourself being proud to stand behind, it will set you on the right path and help you through the challenges of business ownership that will inevitably come along the way.
After finding some good options at face value, I would of course look closely at each of their FDD’s to get clear insight on the financial performance history and requirements. I would plan for the worst of the numbers presented to you, so that you are mentally and financially prepared and not caught in a resentful or over exposed position should you face difficult challenges in your first 1-2 years (it happens).
And finally, I would learn as much as you can about the franchisor leadership and operations team that will be working with you. Are you confident in their track record? Do you feel a strong sense of shared values and vision? Are you clear on how you will work effectively together to follow the model and make your business successful? Effective teamwork is one of the greatest “make or break” elements to success in business … and you are buying into a model that will be taught to you by these people.
Graham Chapman, CEO, ZorForum
First and foremost, understand the sheer cost associated with buying (and sustaining) a restaurant franchise. While restaurants are the first thing most people think of when hearing “franchise,” there are dozens of other industries that use the franchise business model. From a sheer financial capacity standpoint, most potential business owners/investors are better suited exploring a different franchise industry/category.
However, for those who are qualified to open/own a restaurant, here are a few thoughts: One, it’s unlikely you’ll generate an appropriate return on your investment unless you’re prepared/planning to become a multi-unit owner, two, make certain the franchisor has a proven track record of helping new franchisees open locations on time/under budget (ask them if they have internal/external resources dedicated to eliminating “SNO”), and three, figure out how the franchisor has (and will) embrace AI/technology/robotics to the benefit of its customers, employees, and franchise partners.
Stan Friedman, cofounder, CDO, ZorForum, LLC
Three quick things.
- What was the brand’s situation pre-COVID
- How did they manage through COVID
- What do they look like post COVID.
This can be as telling about leadership and culture, as anything you’ll learn in the FDD.
Tim Parmeter, founder and CEO, FranCoach
The most important thing in finding the best fit actually has nothing to do with a specific brand. As a potential franchise owner, you must focus on YOU. What do you want to do every day as an owner and who are you around in your business.
As a franchisee in the food industry, even as a semi-absentee owner, you have a business that does not operate solely in a 9-5 vacuum. Are you up for that challenge? Do you want a business that will have a team that will constantly be changing or one that has inventory to manage or a retail location to maintain?
If so, then the particulars of the brand will matter. If not, then perhaps the food industry isn’t for you and guess what, that is OK too as there are literally thousands of non-food franchises out there that could be a better fit for you.
Michelle Rowan, president and COO, Franchise Business Review
Satisfaction from existing franchisees and unit profitability are the leading indicators of potential success you could have. Use the data in the FDD and connect with as many franchisees as you can to understand the relationship with the corporate team, and how they are helping the franchisee run and grow their business. In addition, evaluate the simplicity of the business operation (how easy will it be to train employees), the size of the building required to run the business, how many products are required, and how many people are needed to run it to make your money go the furthest as you ramp up and aim to break even as quickly as you can.
