Which Franchises to Look Out for When Buying a Franchise in the Food Industry
So you want to buy a franchise in the food industry? Brilliant. Now it’s just a matter of deciding which franchise opportunity is the best for you. Read on to find some advice about buying into a franchise, as well as the food industry in particular.
Legalities and Licenses
First of all check that the franchise you are buying is up to date with rules and regulations, licenses and legal work in general. Food is something which can spoil and get contaminated and for your business to thrive, you need to be aware of the rules and regulations surrounding this, as well as any potential license that needs updating (if you are buying an existing location). Falling behind can put you in a lot of trouble. You want to work with a franchisor who puts the quality of the food first. Check their history and speak with current franchisees to find out more.
Operational Systems and Supply Chains
How good are the operational systems of the franchise? Will the food in one town taste exactly the same as in another town? Clients will come to depend on that. Whilst there might be space in some instances (depending on the regulations of the franchise) for a local special, nine times out of ten the food should taste the same everywhere. The exception to the rule are stores such as 7 Eleven, which work with the same suppliers, but each store gets to choose which of the suppliers they work with. 7 Eleven is more of a convenience store, but they do serve take-away food items.
Another thing to bear in mind with the operational systems is that things have to function well. If it’s a food business where food is prepared fresh on the premises, it should be done the same way as it’s done in all other locations and at the same speed. McDonalds pride themselves in knowing how to flip the most burgers the fastest and that’s the attitude you want. The faster you get food out the door, the happier your clientele will be.
Sales per Store Unit and Margins
If you are thinking of owning a restaurant franchise, take-away restaurant or fast food chain, you will want to know the average sales figures per unit. Likewise, if you are buying a coffee roaster or food production retailer of any kind, you need to know their average sales figures. Try to get as much date as possible as well - which franchisees are doing the best and why? If some failed, why was that? Ask the actual franchisees, don’t just rely on what the franchisor is saying.
You also have to be aware of the sales margin. In many food franchises the margins are low, especially in fast food. You might therefore want to consider a food franchise that has the highest margins, unless, of course, you know the low sales prices will guarantee you enough clients to make it a successful business.
Whether you are selling B2B or B2C there will be a certain level of brand awareness. When it comes to relatively new franchises, this kind of awareness might be zero. If you truly see potential in the franchise, it might be worth investing even thought there is no brand awareness as of yet, but it will be harder to gain funding for the business as well. Of course, if you can join a new franchise that will take over the world, then you are very lucky.
The thing with brand awareness is that it almost guarantees a certain number of customers - the ones that are already faithful, or at least aware enough of the brand to be willing to try it out. Then it is up to you to turn them into loyal customers for your particular store.
Another important part of brand awareness is that it helps you raise funds as investors are more ready to invest in a brand that has a proven track record, not just in one area, but a brand that is universally acknowledged, such as Starbucks or Subways.
Of course, great brand awareness also means that if something goes wrong somewhere along the way (like the recent Monsanto and Starbucks debate, admittedly somewhat askew and falsely presented online and KFC no longer being allowed to label their chicken as chicken because there was too little chicken in it, which was an urban myth, but who didn’t hear it?) everyone will know about it. Usually bigger franchisors know how to run their businesses well though - there’s a reason they have built a reputation.
Food franchises are available at varying costs. It depends on what kind of franchise you are looking into buying. If you are looking at operating a mobile coffee shop franchise, that’s very different from buying a large restaurant franchise. As a general rule food franchises are not the cheapest ones, but they are, by far, not the most expensive businesses to buy either. Compared to starting your own business from scratch, franchises are generally inexpensive.
In general you have to do your due diligence - from finding out the average success rate of franchisees buying into the franchise, to any pending law suits against the franchisor, you need to know the ins and outs of the business.
It’s also very important to know what the franchisor has in mind for the future - have they done their market research? Are they constantly developing new products? Have a look at McDonalds for example. A few years back they started introducing salads and low calorie meals. Then came breakfast options and coffee.
Your Target Market
You don’t just need to know the track record of the company, you have to know if the franchise is suitable for the area you have in mind. For example people into an organic and ethical lifestyle are not necessarily interested in highly processed foods, so if you are starting a B2C food franchise in such an area, pick one that suits the needs of the market.
Frozen yoghurt and Mexican food are on the rise, so if you get in whilst it’s still booming, you might have something going for you.
Great Food Franchises in Australia
Below you will find a list of some of the food franchises in Australia.
- Boost Juice
- Pizza Hut
- Sumo Salad
- Domino’s Pizza Enterprises
- Pizza Caper’s Gourmet Kitchen
- Brume’s Bakery
- New Zealand Natural Pty Ltd
- Cafe2U Mobile Coffee Franchise
- Donut King
- Wendy's Supa Sundaes
- Red Rooster
- McDonalds (the most popular fast food franchise outlet in Australia as of 2014 according to a Roy Morgan survey)
- IGA (the most popular grocery store franchise in Australia according to InsiderRetail.com.au)
- Mrs Fields
- Hungry Jack’s
- Nando’s (fastest growing fast food chain in Australia as of 2014 according to a Roy Morgan survey)
- Ferguson Plarre Bakehouses Franchises
- Coffee Emporium
- Esquires Coffee The Coffee Guy
- bb’s Café
- Bean Bar
- Gloria Jean’s Coffees