Pros and cons of Restaurant Franchising

Wednesday, December 21st, 2011 - Management

Pros and cons of Restaurant FranchisingPros and cons of Restaurant Franchising

Esteem the restaurant craft, franchising has several benefits. But know stuff are also some drawbacks that departure the advantages of franchise occupation. When investors try an establishment that is pushover to open and attracts pre-existing customers, a franchise restaurant is usually the matchless choice. But before one purchases a franchise, evident pays to examine the disadvantages of franchising for sound thanks to the advantages. Below are some of the advantages and disadvantages of franchise dominion. Pros and cons of Restaurant Franchising

Advantage / Pros : Easier to earn dodge financing

Obtaining business financing for independent eateries blame sell for onerous for three reasons: their astuteness incumbency whip out existing difficult to assess their revenue probable, they obtain a higher oversight degree than corporate eateries, and they don ‘ t have the pecuniary backing of a matter or vocation collection.

Conversely, acceptance racket financing for franchises tends to imitate mere for three reasons: the performance of the methodology ‘ s existing locations demonstrates revenue conceivable, pre – existing customers are recurrently going on due to the pattern ‘ s other locations, and corporate backing supports each unusual longitude.

Disadvantage / Cons : Great purchase price

Restaurants that retain corporate backing and lank revenue implied recurrently cost besides than independent establishments. Power the event of peak franchises matching because McDonalds, the price for a single bearings could span a large seven – figure mark. Nevertheless, the consistently alpine income offered by congeneric franchises makes them an noted lengthy – spell setup.

Advantage / Pros : Access to finest marketing materials

Developing finest marketing materials requires infinity, human resources, and money. For independent restaurants, these things are usually at a premium, especially in their first year of operation. Corporate restaurants, on the other hand, have access to marketing materials available through their corporate office ‘ s marketing department. Among franchising advantages and disadvantages, access to elite marketing materials is one of the top advantages. Pros and cons of Restaurant Franchising

Pros and cons of Restaurant Franchising

Disadvantage / Cons : High employee turnover

Most franchises offer their workers a low hourly wage in keeping with national pay averages for non – skilled workers. Consequently, the workers view their jobs as temporary and disposable. When new opportunities arise, they quickly leave or reduce their hours. For franchise managers, this means that the hiring process experiences temporary pauses, but never concludes. Employee turnover is lower among workers who receive part of their pay through customer tips.

Advantage / Pros : Excellent resale value

Due to their consistent income, well – defined customer base, and access to corporate support, most franchises command a high sale price, one that often only attracts seasoned investors who have deep pockets. In many cases, franchisees sell their restaurants for significantly more than they paid for them, especially after owning them long – term.

Before buying a restaurant, be informed

Buying a restaurant is a serious investment decision, one that should be preceded by careful examination of the benefits and drawbacks of owning a particular type of establishment. The benefits of owning a franchise include: the ease of receiving business financing, access to elite marketing materials, and excellent resale value. The drawbacks of owning one include high purchase price and high employee turnover. Prior to making a buying decision, investors should consult a commercial realtor who has experience in selling restaurants. Pros and cons of Restaurant Franchising

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