In developed countries the food franchise is one of the fastest growing businesses. In Australia and US we are surrounded by the food and the food franchising ads. What's more, some businesses sell food as a side business (e.g. petrol stations) but the demand for the product is still growing. From outside, it looks that the food selling bonanza has no limits. However, the food franchise may work well in the established locations. For other areas, the food franchise opportunities can be limited and costly.
For most of us the food franchising is confined to fast food outlets and take-aways. These are the food businesses which the general public visits most. However, food franchise opportunities also exist in restaurants, coffee-cake outlets and the ice cream. On the other hand, the restaurant franchise opportunities are rather complex but can be surprisingly rewarding (if designed smartly). The food franchise has many categories:
The choice of the particular franchise should not be based predominantly on the product. For example, just because you like burgers it does not mean that you should not purchase the ice-cream business. On the other hand, just because you love coffee it does not mean that you are suited to run the coffee outlet.
Before purchasing a food franchise you must understand its business model.
Legally, the food franchise falls under distributorship.
The distributorship allows the franchisee to act as the wholesaler of the franchisor's products within a defined territory.
The business can (and generally must) carry the logo of the franchisor.
Although, this looks simple enough there are complexities within each agreement.
The obvious "Ten Commandments" will always carry 100+ other legal specifications.
Most food franchise models specify the food product, pricing, equipment, advertising and the fit out. Thus, most of these items are supplied by the franchisor. The running costs of cooking, waste disposal and the salaries are the sole problem of the franchisee. This is the reason why initial investments and the running costs of some of the food franchises are so high.
Every new shopping center or a retail village provides potential food franchise opportunities. In developed countries, where people can afford to go out or take-away, the food franchising will keep growing. In Australia, the massive influx of middle class immigrants boosts the development of more residential estates. This in turn attracts more shopping centers which keep offering new food franchise opportunities. Today, it is not surprising to see fast food franchises in small Australian countryside towns. As long as the popular culture dedicates Friday evening for take-aways and weekend to go out, the food franchise will thrive.
The restaurant franchises are tricky businesses to run.
Most of them operate from afternoon till evening during the week.
Weekends are usually the best trading days but still the opening hours seldom include the breakfast time.
Thus, restaurants are not 24 hours services.
The well exposed location of these businesses is extremely important. Most people do not go to specific restaurants. Many will stroll in the main streets to choose what they like. Yellow Pages and local directories will seldom help to bring crowds.
Thus, the position and the word of mouth are key elements for the success. One would wonder, why should I choose the franchise rather than your own brand. The reason is simple. The restaurant franchise opportunities are based on the same product and the same service. Thus, if people like specific restaurant franchises in Melbourne then they will most likely go to the same franchises in Sydney. This way you have not only the media advertising but also the word-of-mouth networking.
Food franchises almost exclusively require permanent outlets.
The cost of equipment, advertising, renting and decor is substantial.
On your own you will probably spend half as much as it is expected from the franchisee.
However, on your own you will have a serious difficulty to convenience the public towards your product.
The initial investment for the famous fast food outlets like McDonalds and KFC is around $200K-$500K. Hungry Jack is dearer - about $1.3million needs to be invested initially to run the outlet. Subway - the famous healthy snack bar costs around $250K to start operating.
Other healthy choice food franchises, such as Healthy Habits, sell for 250K - $500K. Coffee-Cookie outlets are also expensive. The initial investment for Jamaica blue starts at $250K. The same price applies to Michel's Patisserie and the Muffin Break. Most pies and bakeries follow the same line of investments.
Generally, you need to invest +/-350K for an average food franchise of a prominent brand. The actual price depends on the food franchise opportunities in the area. The same pricing model applies to the restaurant franchise opportunities. Thus, more popular locations will always demand a higher initial investment.