How to Turn a Mom and Pop Restaurant into a Franchise Business

franchise business

Planning to turn your mom and pop restaurant into a franchise business?

You need to know a few things before you get started. You want to make sure your restaurant is the franchise of choice for many potential franchisees. There are tons of franchises for sale, but yours needs to be the one that stands out as the best option.

So, how do you do this? Let’s take a look at a few steps you need to take to turn your small restaurant into a franchise.

Make Sure Your Restaurant Is Successful

There are no legal requirements that sate that your restaurant has to be successful to franchise. However, being profitable is one of the major selling points to a potential franchisee. Not many people would want to join a business in general that would not make them money. The same goes for owning a franchise. Franchisees also like to see you making steady profits over a few years.

If you aren’t successful, you may not even have the funds to franchise your restaurant without acquiring a ton of debt. The foot-traffic from customers may also be lacking. This will set your franchise up for failure before it even gets a chance to run. It’s a lot better to wait a few years until your small restaurant is more profitable.

Of course, if you are already successful, this will increase the odds of finding interested franchisees and making your business more lucrative.

Prepare Audited Financial Statements

To reassure potential franchisees that your restaurant franchise is one of the best franchise opportunities available to them, you can show them audited financial statements. This will also validate the steady income over the years you’ve been in business.

These statements show the bigger picture of your restaurant. Accountants will verify all sales and debts, and vendors will be asked to verify their invoices. With the backing of professionals, you will appear a lot more credible to your potential franchisees.

Build A Solid System That Works

Before even thinking about franchising, you’ll need to make sure the systems you have in place are repeatable and solid. You need to make sure they are easy to follow by anyone and use clear and direct communication. Spend as much time as necessary to develop your training material and procedures. Remember, you will be in business a few years before franchising, so the sooner you work on these materials, the longer you have to perfect them.

With this being said, an operations manual also needs to be put into place. Customers will be expecting the food to taste the same at all locations they visit. This doesn’t mean certain menu items can’t change or be added. But overall, the main menu, recipes, and portion sizes should be consistent at all franchises. This operations manual will be used by your franchisee to ensure the quality of your products and customer satisfaction are not compromised.

Know the Difference Between Being A Business Owner and Franchisor

Does being able to run you Mom and Pop restaurant automatically mean you’re ready to run a franchise?  Not necessarily. Let’s take a burger business, for example. Trying to sell a $3 burger is entirely different than trying to sell a $300,000 franchise opportunity. It takes vastly different skills to be able to execute this effectively.

Also, hiring employees is different than bringing franchisees on board. There are fewer risks and costs associated with hiring employees. Employees are held accountable for specific procedures are expected to follow them. Franchisees have to almost be convinced that those procedures are necessary. Due to extensive training, franchise setup, and other associated costs, bringing franchisees on board will be a lot more costly and time-consuming. You also have to be better at persuasion and negotiation.

Protect Yourself Legally

Some restaurant owners get so excited to begin their own franchise that they don’t build a firm legal foundation. This is a huge mistake and can cost you a lot of headaches and money in the future. Franchising your restaurant requires you to abide by certain guidelines. All standards and rules set by the Federal Trade Commission must be followed at all times.

Another important thing to note is the importance of federally protecting your trademark. Some franchisors make the mistake of only protecting their trademark within the state it’s operating in. This leaves your branding susceptible to senior claimants. When you federally protect your trademark, you ensure no one else will use any logos or other branding associated with your franchise.

You don’t want to get yourself into any avoidable legal trouble. It would also be unethical to knowingly leave your franchisee open to legal issues. Knowing the legal steps to turn your Mom and Pop restaurant into a franchise is one of the most critical steps.

Training Arrangements

When you first begin franchising your restaurant, you will most likely manage it by yourself. But eventually, when you start growing, you’ll have to have some staff to aid you. They will sell the franchise licenses and train new franchisees with the program you’ve previously created.  This is another reason why all programs and procedures should be clear, direct, and easy to follow. Whoever helps you with the program will be able to train with ease.

At first, the training may be able to be done at your restaurant. But as even more franchisees become interested in the fantastic opportunities you are offering them, you will need more space. A lot of restaurants get a commercial space with a functional restaurant kitchen for training. This is a cost some franchisors forget to factor in. But this is a costly mistake you need to avoid.

Conclusion

Turning your mom and pop restaurant into a franchise takes careful planning, financial validation, legal protection, and reliable procedures. This can be effectively developed in the number of years you are operating since it will take some time to gain enough credibility to be an attractive franchisor.

Take Zac’s burgers, for example. They have been operating for 35 years but have just recently begun franchising in the last 5 years. This is why they are a popular option amongst franchisees because they have built a reputation for providing great customer service and amazing food.

If you have all legal requirements and are fully prepared, then it’s time to start building your franchise!

Zacs Food Truck

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