Signs of a Top Food Franchise

If you say the word “franchise” to someone, chances are the first thing that will pop into their heads is or . Food franchises are one of the best-known franchise categories, and restaurants in general are part of a $580 billion industry. In fact, on any given day, more than 130 million people in the U.S. will be dining out.

Walk down the main boulevard in most U.S. towns and you’ll see a Wendy’s, , or . At the local mall, you can dine at or . Even when you need a quick snack on a road trip, you can find a Subway or at the gas station or travel center.

But when you’re in the market for a food franchise, what makes one franchise better than another? In making that decision, you need to do the typical due diligence that every potential franchisee should complete. But beyond that, there are five traits that set the best food franchises apart from their competition:

1. They have good brand recognition.

The importance of brand recognition cannot be discounted in a marketplace crowded with restaurants and quick-service food franchises. “If customers are already familiar with the brand, that bodes well for your success,” says Blair Chancey, editor of QSR Magazine. “It will at least point you in the right direction.”

2. They’ve got forward momentum.

It’s all well and good if a company is hot today, but when signing a multi-year contract, you want to make sure that company is going to stay hot. For forward momentum like that, you need not just a strong brand name, but a strong company behind the name.

“A franchisee should believe that unit-level economics — returns, profits, how much money they make vs. how much they put in — will remain strong going forward,” says Steve Romaniello, managing director of Roark Capital Group and chairman and former president of FOCUS Brands, a multibrand franchisor of more than 2,200 units under the brands , , Seattle’s Best Coffee, , and .

Romaniello says a number of elements contribute to the type of forward momentum franchisees desire: A good management team at headquarters; whether the company is involved with a food trend “with the wind at its back;” a good owner who has capitalized the brand correctly; investment in a strong training program; and good customer service, both at the unit level and at headquarters.

3. They continously evolve.

Another trait crucial in the food business is a continual effort to evolve the brand. “Successful food companies tend to be innovative with new products and new ways to interface with the guests, whether via technology or otherwise,” says Romaniello.

For this reason — and many others — the franchisor should be well capitalized. “Is the system not burdened by an incredibly heavy debt load? Are they able to withstand the ups and downs of the marketplace and still invest in the brand?” says Romaniello. “They have to evolve.”

4. They’re smart about site selection.

Site selection is crucial, says Russ Umphenour, current president of FOCUS and a former CEO of RTM Restaurant Group, which owned 775 units. How selective is the franchisor you’re considering when it comes to location? “The great franchisors do a good job of training. They also do a good job of marketing,” says Umphenour. “But both of these things are irrelevant if you choose the wrong location.”

5. They’re picky about partners.

While it may sound counterintuitive, Umphenour says you should seek food franchisors that are picky about potential franchisees. “So many franchisors are willing to take money from anyone who comes through the door,” he says. For example, at FOCUS Brands, all franchisees must have solid restaurant experience; if not, they must complete an internship at a restaurant, learning every task, before being considered for franchise ownership.

How can you tell if a food franchisor is choosy enough? One way is to evaluate how they evaluate you. This isn’t a test you necessarily want to breeze through; you should appreciate thorough due diligence and welcome the opportunity for extensive training.

While franchise growth is generally a good thing, sometimes, there can be too much of it. Asks Umphnour: “Is this franchisor just selling franchises, or [are they] always trying to do the right thing for the brand?” Take this consideration into account, and you’re more likely to choose a food franchise that will lead to a successful future.