Stop Restaurant Franchising Dreams from Becoming Nightmares

Restaurateurs often contact me, thrilled they have one or two promising-looking units.

In their mind they have made a fantastic leap toward having a national group of franchisees that provides them incredible mailbox money with lots of zeros they no longer have to work for.

Sure, their franchising dream looks attractive, but even if you did not pay attention in high school English class you can see that the word “fantastic” is clearly related to fantasy. 

In that way, these restaurateurs are like my seven-year-old daughter, who woke up one morning and shared her dream that she had gone to Target, cleaned out the toy aisle, and only had to pay $1. 

Such dreams tend to be attractive, but they are not reality.

These restaurateurs’ franchising dreams are a fantasy, but one thing in their favor is that they have approached me – and that tells me they want to listen to a reality-based voice that’s outside their head.

The challenge? My voice is duty-bound to offer them entirely different thinking.

They won’t be able to attract the rock-solid caliber of franchisees to make this worthwhile.

Franchising to neighbors, friends, friends of cousins, or some doctors or lawyers generally leads to disaster, and the dream turns into a nightmare.

The Right Path I Illustrate for Them

  1. Do the hard work of funding and building owned units.
  2. Don’t give up control of your restaurants or their brands:  Use the cash flow from existing units and angel investor funds to achieve Step 1. 
  3. Build infrastructure to handle those stores so your operating, marketing, and administrative technique grows. 
  4. Gain experience with your concept and create results that build a great business.
  5. Keep doing this and, one day, your company may become bankable. People will approach you to buy your business.
  6. If you develop a clear, compelling path to attracting multi-unit, multi-concept organizations, the gold standard of franchisees, keep thinking about franchising. Those select franchisees excel at operations and execution but not at concept development. They have a tremendous array of choices about which brands they buy into.

Having a Few Successful Units Tells You Nothing

Sure, I have clients who are crushing it with franchising and have an incredible future because they use a simple system and insist that each franchisee be an owner-operator.

Unfortunately, I have more clients who have had to buy their franchisees back, realizing they could not attract a franchisee of the caliber they really needed to sustain franchising as a growth vehicle.

These people wish they had my advice at the beginning.

Over to you. If you dream about franchising, has this information woken you up? What do you plan to do to turn your dreams into reality?