Open a Franchise | Pandora CloudCover

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Franchise Restaurant Basics You Should Know

Franchise guidelines: Your franchisor will provide guidelines that cover things like the products you can offer, the environment you must create, and the assets (like logos and colors) you must use.
Hiring and staffing: It’s critical to choose the right staff members and support them with detailed training and orientation. They will be the backbone of your location.
Securing financing: You can use your own money to fund the venture, or you can look into loans that help you protect your assets.
Legal and local regulations: You must understand your environment and follow the rules to open your doors to customers.
Background music providers: Music is essential in setting the mood for your restaurant, and partners like Pandora CloudCover make completing this step easy.

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Things to Consider When Opening a Franchise Restaurant

A franchise allows you to tap into a recognized brand and proven business model while allowing you to serve your community.

Franchising a business is a smart way to open a new business, especially a restaurant. Instead of coming up with a menu and concept independently, you can use something that’s already worked for other people.

Here’s what is important to know.

Before You Open

Several different types of franchise business models exist, including fast food, fine dining, and fast casual. Regardless of the format, customers have an appetite. In a 2023 study, 55% of consumers said they eat out now as much as they did before the pandemic began.

To succeed in the franchise restaurant business, you should understand key terms, such as these:

Royalties: These are the fees you owe the franchisor in return for the use of the brand.
Advertising fees: These are the funds you must pay to spread the word about your franchise.
Franchise manual: This is the handbook the franchisor provides to help you comply with the rules.

At this point, you’ve already chosen a franchisor and are prepared to open your doors—that’s why you’re searching for how to open a franchise restaurant. However, if you haven’t taken this step yet, choose the right partner by looking at how many restaurants are in your location and what niche hasn’t yet been filled. For example, if your neighborhood already has six taco shops, you could differentiate with a sit-down franchise.

The restaurant industry is struggling with higher rents, high loan interest rates, and plenty of competition. By choosing your partner closely, you can mitigate some of the risks of the economy’s impact on franchises.

Building a Business Plan

As the U.S. Small Business Administration (SBA) explains, a good business plan can guide you through all the steps you must complete to both start and manage your business.

It’s more than a writing assignment. Instead, it’s a document that helps you to examine—and plan for—all of the challenges you might face.

A typical small business plan has many elements, such as the following:

An executive summary of what your restaurant is and why it’s likely to be successful
A company description that includes your location and your competitive advantages
A market analysis that includes your strengths, your competition, and your target market
An organization section about who will run your company
A description of the products and services you’ll include
A detailed marketing plan
A financial section, including a request for funding (if you want investors) and your financial projections

Once your document is written, ask a legal expert to review it for you. A lawyer can help you ensure that you have all of the required parts of your plan, especially if you hope to borrow money. Lenders may ask for this plan before they consider your application.

Financing Your Franchise

Opening any business requires money, and franchises are no different. Before you can serve your customers, you’ll need money to build up the space, purchase supplies, and more. Getting financing is important.

You can choose self-funding and put up the money for your business from your savings and assets. This approach allows you to buy without asking anyone for help or money.

If you choose to get a loan, the SBA recommends looking for warning signs such as the following:

Coercion to sign the documents
Very high interest rates
Missing full payment schedules
Blank boxes

Get quotes from many potential lenders, and ask an attorney or accountant to review the documents before you sign.

Location Strategy

As experts explain, some franchisors have the right of final approval on a franchise location. They must protect the rights of other investors, which means they can’t allow close competition. They may also want to protect the brand from operating in less-than-desirable spots.

Do your homework on the potential for competition before suggesting a location to your franchisor. You can also use tools to investigate your market and how likely you are to succeed.

Consumer expenditure surveys from the U.S. Bureau of Labor Statistics can help you dig into how much people tend to spend on the types of food you hope to share. You can use sites like Statista to determine how many other companies are in your area (that could be your competitors). You could also ask the franchisor to provide you with their data about the business model and why it’s likely to succeed.

Building or Retrofitting

Once you’ve chosen your location and it’s approved, you’ll need to either build your facility or retrofit an existing building. Some design/build companies are willing to do this work from your franchisor manual. The building you get is designed with the brand in mind.

Any contractor you choose should be licensed and have experience working within your local zoning laws. The contractor should also get the appropriate permits needed for the work.

If you skip these steps, your opening could be delayed, you could be fined, or both. This isn’t a step where you should attempt shortcuts.

Operation Management

Setting up operational processes before you open can streamline training and ensure your team onboarding is as efficient as possible.

A typical operations manual includes these sections:

Who we are: This section explains your mission, values, and vision. It helps to get everyone on the same page from the get-go.
Our organizational structure: This section provides an organization chart and a short description of each job title.
Processes and procedures: In this (lengthy) section, you’ll explain common tasks that take place in your restaurant. You could explain everything from how to take an order to how to clean the bathroom.
Policies: In this section, you’ll cover things like visitor confidentiality and penalties for theft.
Training: Here, you’ll outline how each staffer will be trained and how they’ll keep their skills sharp. All requirements should be outlined here.

Your franchisor may have documents that you can borrow for your operation manual. Once the document is complete, ask a human resources expert or lawyer to review them to ensure they’re comprehensive and appropriate.

Hiring & Training

It’s critical to find the right staff to help you serve customers, and they must be trained before they start working.

Finding staff isn’t always easy. In January of 2023, the quit rate for restaurant workers was 5.4% — higher than the rate seen in other industries. While it might be tempting, don’t hire the first person you interview. Be selective, hold interviews, and ask for references.

Once you’ve chosen your staff, use your operations manual to help train your new employees. Preparing workflows and processes ensures that they’re ready to go right away.

Marketing & Digital Investment

In 2018, experts warned that the restaurant market was oversaturated. Things haven’t improved since then. To succeed in this space and lure customers to your franchise, you’ll need a solid marketing plan to spread the word.

A successful marketing plan could use several channels, such as the following:

A website that uses SEO techniques to lure in searchers
Social media channels (such as Facebook, Instagram, and TikTok) to share the news about deals and events
Billboards to attract hungry drivers
Digital advertising (such as Google Ads) to lure in more customers

In-person networking may be useful too. For example, you could bring samples of your food to nearby offices to highlight your tasty treats. You could also join your local business organizations to meet others who work in your community.

The Power of Background Music

In a 2023 study, 86% of consumers said that good music in a bar or restaurant creates a more memorable experience. Consumers who like the music may be more likely to stay and spend more money. They may also be more likely to tell their friends about the space.

Partnering with a company like Pandora CloudCover ensures that you play music with the proper license. You won’t be faced with fines or lawsuits for playing music outside of its copyright. You can also select a plan that allows you to share overhead messages about sales and specials.

Your franchisor may have specific rules about the songs you can (and cannot) play. If not, your music partner can help you create a playlist that works for you and your customers.

Expansion & Next Steps

With your business up and running, it’s time to consider expanding your franchise. The U.S. Chamber of Commerce says many business owners take this step after ensuring that the company is generating enough money to grow while monitoring customer acquisition costs.

Before you open another franchise, consider the following:

Can your market handle two distinct businesses?
Do you have the bandwidth to run two businesses?
Can you find the right staff members?
Is there a building that you can build or retrofit for the new location?
Can you fund this venture?

Helpful Tips to Succeed in a Franchise Restaurant

These are helpful tips we recommend for people who want to do well in a franchise restaurant market:

Create a solid business plan that includes details that put your local spin on an established brand.
Keep an open line of communication with your franchiser, as this person has successfully paved the way and can help you succeed.
Dig into your local market and adapt your business accordingly, as this approach can make or break your restaurant.
Create and apply appropriate onboarding documents and training procedures to prepare staff to serve customers.
Understand your finances, including your potential risks, and prepare for them.
Lean into digital marketing techniques and customer analysis tools, as they can give you the data you need to make smart decisions.