Food Franchise: Business Plan, Opportunities, Costs

Food Franchise As A Business Model: Know The Facts

Food franchise is a business model in which a franchisor grants the rights to use their brand name, products, services, and operating systems to a franchisee in exchange for fees and royalties. In the food industry, this typically involves a franchisor who has established a successful restaurant concept and brand, and a franchisee who is looking to start their own restaurant business under that brand name and system.

Food franchise agreement

When a franchisee purchases the rights to operate a food franchise, they typically receive support and training from the franchisor, as well as access to the franchisor's supply chain, marketing materials, and other resources. The franchisor will also typically provide ongoing support to ensure that the franchisee is operating the business in accordance with the franchise system standards.

Top 10 Restaurant Franchise Options

If you're seeking ideas for business franchises, the restaurant industry offers a wide variety of brands to consider. Whether you're interested in investing in a well-known fast-food chain or aspiring to manage a high-end dining experience, there are numerous appealing options available to explore, for instance:

1. Fast Food and Quick Service Restaurant Franchises (e.g. Mc Donalds, Burger King, Wendy’s, KFC, Taco Bell and more)
2. Fast Casual Restaurant Franchises (e.g. Wingstop, Fresh Healthy Cafe, Ufood Grill, Qdoba Mexican Eats, Captain D’s and more)
3. Casual Dining Restaurant Franchises (e.g. Dickey’s Barbecue Pit, TGI Fridays, Chili’s, Huddle House, Bennigan’s Grill and Tavern and more)
4. Fine Dining Restaurant Franchises (e.g. Rodizio Grill, Mastro’s Restaurants, The Melting Pot, PF Chang’s China Bistro, Olive Garden, Red Lobster etc.)
5. Pizzaria Franchises (e.g. Pizza Hut, Domino’s, Papa John’s, Marco’s Pizza, Boston’s Pizza Restaurant and Sports Bar and more)
6. Breakfast and Bakery Restaurant Franchises (e.g. Dunkin’, Krispy Kreme, Another Broken Egg, Cinnabon, Paris Baguette etc.)
7. Smoothie Shop and Ice Cream Parlor Franchises (e.g. Smoothie King, Baskin Robbins, Cold Stone Creamery, Tropical Smoothie Cafe, Ben & Jerry’s and more)
8. Sandwich Shop and Deli Franchises (e.g. Subway, Jersey Mike’s, McAlister’s Deli, Capriotti’s Sandwich Shop, Schlotzky’s etc.)
9. Coffeehouse Franchises (e.g. Scooter’s Coffee, The Human Bean, Biggby Coffee, Ziggi’s Coffee, Ellianos Coffee and more)
10. Steakhouse Franchises (e.g. Quaker Steak and Lube, Bonanza Steak and BBQ, Western Sizzlin, Golden Corral, Ruth’s Chris Steakhouse etc.)

Restaurant Franchise vs. Indepent: Pros and Cons

There are some pros and cons of running a restaurant franchise vs. an independent restaurant. Know your needs and the requirements for franchisees in the food industry and make a well-considered decision about which business model you prefer:

Pros of Running a Restaurant Franchise:

• Established Brand Recognition: Franchisees benefit from the established brand recognition of the franchisor, which can help to attract customers and drive sales.
• Proven Business Model: Franchisees can leverage a proven business model that has already been tested and refined, reducing the risk of failure.
• Support and Training: Franchisees typically receive support and training from the franchisor, which can help them to operate the business more effectively and efficiently.
• Access to Resources: Franchisees may have access to resources such as supply chain management, marketing materials, and technology that can help them to run their business more efficiently.
• Shared Marketing Costs: Franchisees may benefit from shared marketing costs, as the franchisor often conducts national or regional advertising campaigns that benefit all franchisees.

Cons of Running a Restaurant Franchise:

• Limited Control: Franchisees must adhere to the franchisor's operating procedures, which may limit their ability to make independent business decisions.
• Initial and Ongoing Costs: Franchisees must pay initial franchise fees and ongoing royalties to the franchisor, which can be a significant financial burden.
• Restrictions on Suppliers: Franchisees may be required to purchase supplies from the franchisor or approved suppliers, limiting their ability to negotiate prices and terms.
• Limited Flexibility: Franchisees may have limited flexibility to make changes to the menu, decor, or operating hours, which can be frustrating for entrepreneurs who like to have creative control.
• Risk of Negative Brand Image: If the franchisor's brand image is damaged by negative publicity or customer complaints, it can impact all franchisees.

What Food Franchise Makes The Most Money?

The most profitable food franchise depends on various factors such as location, market demand, and competition.

According to the Franchise Business Review's 2021 report, the following food franchises had the highest average annual revenue* in the United States:

1. Chick-fil-A - average annual revenue of $4.9 million per unit
2. McDonald's - average annual revenue of $2.8 million per unit
3. Jersey Mike's Subs - average annual revenue of $846,000 per unit
4. Raising Cane's Chicken Fingers - average annual revenue of $4.6 million per unit
5. Jimmy John's Gourmet Sandwiches - average annual revenue of $789,000 per unit

* It's worth noting that these figures are averages and may vary depending on the location and individual performance of each franchise unit.

How To Start A Food Franchise With No Money?

A food franchise with low investment is a perfect opportunity for founders with little money.

Find some food franchise opportunities with low costs:

1. Subway

Subway is a well-known fast-food chain that offers sandwiches, salads, and other items. Subway has a relatively low franchise fee and startup costs compared to other food franchises, making it an attractive option for entrepreneurs looking for a low-cost franchise opportunity.

2. Auntie Anne's

Auntie Anne's is a franchise that specializes in pretzels and other baked goods. They have a low initial franchise fee and startup costs, making it a great option for entrepreneurs looking for a low-cost franchise opportunity.

3. Kona Ice

Kona Ice is a mobile food truck franchise that sells shaved ice and other frozen treats. They have a relatively low startup cost compared to other food truck franchises, making it a great option for entrepreneurs who want to get into the food truck business without a large investment.

4. Little Caesars

Little Caesars is a pizza chain that offers carryout and delivery options. They have a low franchise fee and startup costs, making it an attractive option for entrepreneurs who want to start a pizza franchise with a low investment.

5. Smoothie King

Smoothie King is a franchise that specializes in healthy smoothies and snacks. They have a relatively low franchise fee and startup costs compared to other food franchises, making it a great option for entrepreneurs who want to start a health-focused franchise with a low investment.

While these franchises have relatively low startup costs, there may be additional ongoing fees and expenses associated with running a franchise.

Do your research

It's important to thoroughly research any franchise opportunity before investing to ensure it's the right fit for your business goals and budget.