PrintAre you considering buying a franchise? Fast food is one of the biggest categories in franchising, and fast food restaurants are perpetually popular in good times and bad. But while buying a fast food franchise can be very profitable, it does require lots of hard work, and it can still be a risky investment. Here are seven steps you can take to boost your chances of success with a fast food franchise.
1. Evaluate your skills, interests, and financial resources. Before you buy a fast food franchise take inventory of your skills and interests. What appeals to you about owning a fast food franchise? Are you willing and able to work long hours, including evenings, weekends and holidays? Understanding your financial situation will help you narrow your options to what you can afford.
2. Research opportunities. Once you have narrowed the choices down to a few that match your skills set, interests, and budget dig deeper. Ask for a copy of the franchisor's Franchise Disclosure Document (FDD) and financial statements, and review them with your accountant and attorney.
3. Go to the source. Don't rely solely on the franchisor's information in making your decision. Get a list of current and former franchisees from the franchisor (this is included in the FDD). Then interview existing and former franchisees to find out whether or not they are satisfied with their earnings and the franchisor's performance.
4. Research your market. Just because a fast food concept works in one region of the country doesn't mean it will be popular in your area. In dense, urban centers, you are more likely to be successful with a niche concept than in a small town in the Midwest. Also consider the competition. If your market is saturated with similar restaurants and the population isn't large enough to support another one, you may want to rethink your concept.
5. Choose a good location. Your fast food franchise's location within your target area also is critical. If you open a franchise in an area that doesn't get many customers or has no complementary businesses nearby, you're less likely to succeed. A good franchisor will help you select the best possible location.
6. Investigate financing. Once you have chosen a fast food franchise, you'll probably need financing. Because financing can be difficult to obtain, ask franchisors if they offer financing options such as in-house financing, discounts for certain types of franchisees (such as military veterans), or introductions to third-party lenders such as banks that make SBA loans.
7. Take advantage of franchisor programs. Before you open for business, your franchisor should provide some form of training and an operations manual. Take full advantage of all the assistance offered by your franchisor, including training, marketing programs, help with hiring and operations, and more. A good franchisor wants you to succeed and has developed systems to help you do so.
For a list of restaurant and food franchises, visit the Franchise Center at AllBusiness.com.
