The purchase of any franchise presents both advantages and disadvantages. While many of these advantages and disadvantages translate between the different types of franchises, dealing with the purchase of a restaurant franchise comes with a separate set of unique factors particular to the restaurant industry. For a more in-depth breakdown of the pros and cons of a restaurant franchise in Texas, please read on, then contact one of our experienced franchise acquisition attorneys today.
What are the advantages and disadvantages of a restaurant franchise in Texas?
When evaluating whether acquiring a restaurant franchise is in your financial best interests, you strongly consider the following:
- A well-established name: Most franchise locations have a well-known and established name so that everyone from people on lunch breaks to those traveling will already know whether or not they want to eat the product.
- Financing: Funding for food operation businesses is usually simple with banks because they typically know what is involved with opening a restaurant, making the bank feel comfortable approving the loan.
- Training and support: The amount of training and support given by a good restaurant food franchise business is valuable.
- Overestimating the established name: The vast majority of restaurant franchises involve regional franchisors who still have a long way to go in establishing brand recognition.
- Economic climate: Financing is never easy and no matter what franchise you are trying, you should always assume that banks will be difficult.
- High employee turnover rate: In the food business, a large number of employees are usually necessary to run the franchise so it operates properly. At the same time, the majority of employees receive low pay, which leads to inconsistent or unreliable employees with a high turnover rate.
- Price sensitive: When dealing with fast-food chains, there is a very fine line between good costs and labor and turning a profit. Along with the salaries and basic operating costs, a franchisee must consider the cost of food spoilage and other unforeseen issues, such as theft, which are quite common among restaurants and fast-food chains. You may also want to consider the additional costs that you will incur when purchasing proprietary and non-proprietary products from the franchisor’s approved vendors.
- Franchise costs: When purchasing a franchise, a sizeable investment is usually required, including food, ovens, proper food disposal machine, venting, furniture and more. Furthermore, you will have to pay regular royalties, advertising fund fees and premiums for proprietary product purchases, all of which will impact your business’s bottom line.
If you have any further questions regarding these or other franchise-related issues, please do not hesitate to reach out to our skilled franchise law attorneys.
Contact Our Experienced Franchise Lawyer Today
If you have any franchising issues, contact Fortman Spann, LLC online today to schedule your initial consultation.