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Key Steps to Buying a Fast Food Franchise

Written by: Sebastien Page

Article Overview: There's no doubt that investing in a fast food franchise could be a lucrative decision – 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.

Key Steps to Buying a Fast Food Franchise

There's no doubt that investing in a fast food franchise could be a lucrative decision – 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 you'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 – including evenings, weekends and holidays – to this endeavor? You can instantly save time and money by narrowing your options to what's affordable.

2) Do your research! Once you've got the basic idea about your financial situation, dig deeper. Take a look at the franchisor'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 – 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 you're the only game in town, perhaps you should locate near a major freeway or highway heavily trafficked by truckers etc. – that way, you're sure to get some business despite a potentially remote location.

5) Secure your franchise financing. You will most certainly need financing once you'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 – less expensive ones, such as home-based business franchises – 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.

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Article Tags: earning potential, fast food, fdd, financial situation, food concept, food franchise, franchise owner, franchisee, franchisees, franchisor support, location location location, niche concept, no doubt, prime location, regional preference, strip mall, target market, ufoc, urban centers, weekends and holidays



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Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
Re: Are Economic Recessions Good for Franchising? - All we can do is remain wide awake and pay attention to the ebb and flow. My strategy is to be prepared and go with the flow. There could be some rough times ahead... Interestingly, our business has remained strong. I believe it's because we're in such a tight little niche and we're well positioned to sign jobs nationwide, therefore we're not restricted to location. We also target affluent markets that have higher disposable incomes - this we do locally. Here are some Franchise Categories that could weather a good recession... Health and Personal Care Food services like Subway Debt Collection Tax Preparers & Advisors Any other recession proof franchise opps out there?
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.


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