Fast food is a booming industry because of the franchising opportunities it presents. Fast food is one of the largest segments of the business franchise industry as a whole. Nearly every major fast-food chain operates multiple locations with independent ownership and branding. This makes them prime candidates for franchising, which provides them with a ready-made system for rapid expansion that’s lower risk and less capital-intensive than independent standalone locations.
Fast food franchising is a win-win for both parties: operators get to expand their brand easily while franchisees get to enjoy benefits like lower start-up costs and an already established customer base. This article explores why so many fast food chains opt to franchise rather than operate independently or grow organically, as well as advice on getting into this segment if you’re interested in starting your chain.
Why Fast Food Franchising?
One of the biggest benefits of starting a fast-food franchise is that you’re piggybacking on the established brand recognition of one of the most popular industries in the world. When people think of burgers, fries, and milkshakes, they’re likely thinking of one of the big fast-food chains. One of the major benefits of franchising is that it’s more scalable than independent growth. Fast food chains that franchise can expand and grow much faster than companies that only operate one or two locations. This helps to mitigate risk as well as increase revenue, which is critical for survival in a highly competitive industry.
Big Brands Dominating the Fast Food Franchising Industry
While there are plenty of independent chains in the fast-food industry, the ones with the most growth potential are the ones that are franchised. The reason for this is that franchised chains are already established and have a proven business model. The franchisor (the parent company) guides the franchise owner through the whole process of getting started. This removes a lot of the uncertainty of starting a chain because you’re piggybacking on an existing business model.
In addition, franchising is a more scalable business model. The best way to grow a business is to add more customers. Franchising helps to accomplish that. Jimmy John’s and Burger King are prime examples of big brands that dominate the fast-food franchising world. The former operates on a franchise model while the latter still has a few company-owned locations. Even established full-service chains like McDonald’s and KFC are predominantly franchised businesses.
Benefits of Fast Food Franchising
There are several benefits of fast food franchising, including:
- Low start-up costs
- An established customer base
- Access to training and operational materials
- A simple business model
- No real risk of inventory loss
- A ready-made system for managing employees
- A clear path to growth
Low start-up costs
If you’re interested in starting a business, but don’t have the capital to fund it, franchising may be the right option. When you buy a franchised business, you don’t have to come up with a lot of money to get started. Instead, you’ll sign a contract with the franchisor that will often include an initial one-time fee and a percentage of your future profits.
An established customer base
One of the toughest challenges for growing a business is getting the word out about your product. Whether it’s a burger restaurant franchise or similar to that kind, franchising definitely provides you with a ready-made customer base from day one. This is especially helpful in a crowded industry like fast food, where competition is fierce.
Access to training and operational materials
Franchisors often have decades of experience operating in a certain industry and have put together a plethora of materials to help you with everything from staffing to marketing. This is an invaluable benefit you’d have to spend a lot of time and money to replicate on your own.
A simple business model
Franchising often involves the use of a proven business model. You’re likely to operate in a very predictable industry. This means you don’t have to worry about changing tides drastically affecting your business.
No real risk of inventory loss
Inventory loss is something all businesses face. It’s the percentage of your inventory that you lose due to theft, damage, and other issues. Many industries, like food service and retail, have the risk of high inventory loss. Since you’re operating a franchise, you don’t have to worry about this because the franchisor assumes the risk of all inventory loss.
A ready-made system for managing employees
One of the most challenging parts of growing a business is hiring and managing employees. A franchise system is already set up to train and manage employees, and it can provide you with a step-by-step guide for doing so.
A clear path to growth
One of the hardest parts of growing a business is figuring out where to go and how to get there. With a franchise, you have a clear path to growth that you can follow.
Reasons for the Continued Dominance of Fast Food Franchising
Besides the benefits listed above, franchising is also a great option because it’s a tried-and-true method for business growth. Franchising has been around for decades, and it’s been a successful business model for a long time. This means that if you decide to franchise, you’re likely starting a business model that has already been proven successful. Additionally, there are many different types of businesses that franchise. If you’re interested in one particular industry, you can almost certainly find a franchise in that industry.
There are a few reasons for the continued dominance of franchising in business. The first is that franchising provides a low-risk way for businesses to grow. Franchising allows businesses to have hands-off growth. Franchising allows companies to expand their reach to a larger audience and increases their revenue. This is beneficial to both parties: businesses get more customers and revenue, and franchise owners get to take advantage of the marketing and growth of the parent brand.
Tips for Starting a Chain in the Fast Food Industry
As discussed above, starting a chain in the fast food industry may be right for you if you’re looking for a low-risk business model with a built-in customer base. If you’re interested in getting into the fast food industry and franchising is an option, here are some tips to consider before you commit to one particular franchise:
Research and compare different franchises: As with any business decision, you want to make sure you’re choosing the right franchise for you and your personal goals. To do this, you need to do your research and compare the different franchises that are available. This includes reading franchise disclosure documents (which are required by law to disclose any risks and details of a franchise) and interviewing existing franchise owners.
Select a franchise that’s a good fit for your personality: This may sound overly simple, but it’s an important step in the process. You need to be genuinely excited about the franchise you choose. This needs to be a business where you can see yourself for years to come. A franchise that’s a good fit for your personality will be easier to run and will have a higher success rate than one that doesn’t feel right.
Final Thoughts: Is Food Franchising Right For You?
Franchising is a great way to get into the business world. It’s low-risk and allows you to get your brand out there and make money right away. But before you jump into franchising, you need to ensure that this is the right business model for you. You need to make sure you’re passionate about the franchise you choose. You also need to understand that the franchising model is a long-term commitment. You can’t just buy a franchise and expect to make money right away, although there is an established path to growth that can help you reach profitability quicker.