You have a successful restaurant or bar. You were thinking of expanding to a second location on the other side of town to increase your market span, and your bottom line. Expanding to another location could be done in two ways, opening a second location under your management, or franchising your name and operational systems to someone else in exchange for royalties (usually a percentage of net sales). In a franchise situation, you have little risk or investment and are not stretched thin trying to manage multiple locations. For some, this is an ideal situation. These two business models are not mutually exclusive. Some establishments do some of both to expand to new locations.
Here in Rochester, there are several local eateries and bars that have expanded in these ways.
- Jeremiah’s Tavern
- Alladins Natural Eatery
- Mark’s Pizzeria
- DiBella’s Subs
- Pontillo’s Pizzeria
- Jitters Cafe
If you are considering franchising your business, you should be able to answer “yes” to these questions:
- Is the business delivering a consumer product or service that is needed on a regular basis?
- Have you established a profitable prototype business to demonstrate that the concept is viable?
- Can the business be replicated in a substantially cookie-cutter fashion in many different markets?
- Are the skills necessary to operate a store common and easily teachable?
- After paying you a license fee and royalties will the business be profitable to the franchisee?
- With the expected revenues to be obtained from franchisees, will you have enough funding to support the infrastructure for a franchise program?
- After the franchisee learns your business system, does it have motive and reason to continue to be in the franchise system? (strong brand recognition, ongoing training and support, innovative product and service offerings and supplier discounts).
- Have you reduced all of the procedures to a written manual that can be used by others with little or no guidance?
If you can answer yes to these questions, you may be ready to consult with a franchise attorney about the process for franchising your business.