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The Voice of the Foodservice Industry
Franchising Your Restaurant
You have a successful restaurant and think that franchising might be a way for you to quickly expand. How do you
know if franchising is right for you? In this Foodservice Radio interview, we talk with Ryan Palmer, franchise attorney
with Monroe Moxness Berg, about the pros and cons of franchising and some of the things to consider before you
Franchising provides a number of unique benefits to the operator. "One of the great benefits of franchising is the
efficiency provides," says Palmer. "It is a great way to expand your business with relatively low cost, build your
brand strength, and get increased efficiency with suppliers. And if it is done right, develop a nice steady cash flow for
the franchisor. Another positive is that as you expand and open additional restaurants, you can imagine all the
operational or management headaches you would normally have if you ran those restaurants. Those headaches are
not your headaches anymore."
Palmer cautions that there are challenges and differences in running a franchise company. "Someone who has
developed their own brand is really passionate about that brand and it is difficult to lose any degree of control. Also
realize that running a franchise business is not the same as running a restaurant company. You're running a
business that sells business opportunities. You are trying to find entrepreneurs who like your brand to the point that
they want to license part of it and operate it for their own benefit. And they are going to pay you fees for doing that.
There are a number of things you have to do in advance to get ready to franchise. "You have to work a lot to get your
own house in order," Palmer continues. "You have to develop a training program and curriculum that you can provide
to franchisees. You need to have an operations manual they can rely on, and you need to be able to troubleshoot
issues. You have to consider carefully what real estate and what footprint you will need for your restaurant."
Franchisors also need to understand they will be creating ongoing relationships. "In the restaurant industry you have
to innovate all the time," Palmer adds. "You have to find new and better ways to develop and deliver your product and
you have to show your franchisees that you are willing to invest in that. This isn't a one-time sale where you can
wash your hands of it. It is an ongoing, very organic relationship.