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What is a restaurant franchise?

What is a restaurant franchise?

minutes read
Published on
September 14, 2023
Last updated on
October 13, 2023
Aron Lewis
Growth & Marketing Lead
Aron Lewis
What is a restaurant franchise?
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    Whether you're a foodie with an entrepreneurial spirit or an established hospitality business, franchising can provide a shortcut to owning your own restaurant. They have a lot to offer that original concepts can't provide, including built-in support, brand recognition, and a proven business model. 

    But before you take the leap into franchising, it pays to understand exactly what you’re getting into. 

    So what exactly is a restaurant franchise, and how does it work? 

    Don’t worry - we’re here to answer these questions. 

    In this article, we’ll talk you through the nuts and bolts of franchising a restaurant. By the end, you’ll know what a restaurant franchise is, the pros and cons of joining a restaurant franchise, and how to open a franchise as a virtual brand. 

    What does a franchise restaurant mean?

    A restaurant franchise is a business model in which a company (the franchisor) allows another company (the franchisee) to use its brand name, products, and services. In exchange for this, the franchisee pays the franchisor a small fee or percentage of profits. 

    Think of it like a delicious burger that comes with all the toppings. The franchisor provides the buns, the patties, the toppings, and the secret sauce (also known as the brand name, products, and services). The franchisee brings their entrepreneurial spirit and appetite for success. Together, they cook up a winning recipe for a restaurant that satisfies customers' cravings and generates profits.

    What are the advantages of franchising?

    Let’s take a look at some of the benefits of restaurant franchising: 

    • Start your restaurant on the right foot. The history of franchising shows that it’s a successful business model. Look at McDonald’s as an example. Dick and Mac McDonald’s started the business back in the 1940s. After seeing success, they began to franchise. In 2021, there were over 40,000 McDonald’s restaurants around the world.
    • Use an established brand. Franchising provides you with access to a brand that’s already established and may already have a loyal customer base. As a result, you’re already known in the market which puts you in a better position to succeed.
    • Access to a support network. Franchising provides access to a ready-made support network. You’ll get advice on effective management, successful budgeting, and a framework for efficiently running the business. Particularly for first-time hospitality entrepreneurs who might require more assistance, this is a huge bonus! 

    If you partner with Peckwater to launch a virtual brand, you’ll get all the support you need to successfully run an online food-delivery service. You’ll receive training before going live as well as ongoing support with operations, marketing, and analytics when the business is up and running. 

    Plus, we’ll also assess which brand would best suit your business based on your equipment, location, capacity, and local demand. 

    What are the disadvantages of franchising? 

    Although franchising can offer many benefits, there are some potential disadvantages to consider. Here are a few:

    • Loss of control. When you become a franchisee, you agree to follow the franchisor's rules and guidelines. This can limit your freedom to make your own business decisions, from the menu items you offer to the way you market your restaurant. Of course, this can also be a benefit. If you don’t want to spend the time making these decisions or deciding which items to feature on your menu, a franchise is incredibly helpful! 
    • Limited territory. Franchisors typically grant franchisees a specific territory in which to operate. This can minimise your potential customer base and make it difficult to expand. 
    • Brand reputation. The success of your franchise may depend on the reputation of the franchisor's brand. If they have a bad reputation, it could impact the success of your franchise. This is why it’s important for you to conduct research into the brand before you partner with them. That way, you have a clear understanding of the brand you’re representing. 

    Overall, it's important to carefully weigh the pros and cons of franchising before deciding whether it's the right path for you. 

    Types of restaurant franchises

    There are a few different types of restaurant franchises. Here are some of the most common: 

    • Quick-service restaurant (QSR) franchises. QSR franchises are also known as fast-food restaurants. They typically offer a limited menu and quick service, with customers ordering food at the counter and eating it on the go. Examples of QSR franchises include McDonald's, Subway, and KFC.
    • Casual-dining franchises. Casual dining franchises offer a more relaxed atmosphere than QSR franchises and often have a more extensive menu. Examples of casual dining franchises include Wagamama, Bella Italia, and Cafe Rouge.
    • Cafe and bakery franchises: Cafe and bakery franchises typically offer coffee, tea, pastries, and sandwiches in a casual setting. These franchises may also offer breakfast and lunch items. Examples of cafe and bakery franchises include Caffe Nero, Starbucks, and Esquires. 
    • Pizza franchises: Pizza franchises specialise in serving pizza and other Italian-style dishes. They may offer dine-in, takeout, and delivery options. Examples of pizza franchises include Domino's, Pizza Hut, and Papa John's.

    Restaurant franchising isn’t limited to longstanding food brands with a physical, high-street presence. You can also adopt a virtual kitchen as a food franchise. 

    A virtual kitchen is a food-delivery brand that operates exclusively online, typically through third-party delivery platforms like Deliveroo and Grubhub. 

    This is where working with a franchise partner - like us here at Peckwater Brands - can help! 

    We help a variety of kitchen facilities to transform their businesses by using one of our ready-made virtual brands. Our team takes care of the menus, branding, training, and other logistics to help you maximise your kitchen capacity. As a result, you’ll boost your revenue and help your business grow.

    Get in touch to find out more about how we can help you launch a virtual kitchen. 

    How to become a restaurant franchise owner

    If you’re wondering how to take the first step to own a restaurant franchise, you’re in the right place. We’ve outlined some simple steps you can follow to launch your own franchise - or to use a virtual brand in your existing kitchen. 

    Firstly, decide which type of franchise you want to run

    Do you want to run a pizza place? A cafe? A fast-food joint? Decide what type of franchise you want to operate to make sure you’re heading in the right direction. 

    You’ll also need to consider if you want to launch a dine-in franchise or a virtual brand.

    If you already have a commercial kitchen but have the ability to create more food, a virtual brand might be a better option for you. It allows you to maximise your capacity, reduce food waste, and boost your income without forking out a huge investment for a franchise. Anything you pay upfront will only help your virtual brand succeed! 

    Next, confirm your budget

    You need to know exactly how much you want to invest and how much you’re willing to pay each month. This will put you in a good position to negotiate and find a franchise partner that won’t break the bank. 

    When it comes to figuring out your budget, ask yourself the following questions: 

    • How much investment or capital is at your disposal? 
    • Is this enough to cover expenses if growth is slower than expected?
    • How much are the start-up fees and royalty payments to the franchisor? 
    • What are the ongoing overhead costs (such as rent, salaries, and bills)?

    Finally, reach out to potential partners to get the ball rolling

    With a clear idea of what type of franchise you want to run and the budget you have available, you can start reaching out to potential partners to get the ball rolling. Most companies will have a website page dedicated to people interested in buying a franchise. If they don’t, contact them directly.

    FAQs about opening a restaurant franchise

    Take a look at some of the most commonly-asked questions about franchising a restaurant. 

    What is it like to open a franchise restaurant?

    In many ways, opening a franchise restaurant is much like opening a restaurant from the ground up. Finding and hiring a premises, equipping the kitchen, and hiring staff – these are the fundamental first steps of any new hospitality enterprise. 

    But as we know, franchising isn’t exclusively available to new enterprises. 

    Pre-existing kitchens can integrate a secondary food franchise into their business with a virtual food brand! They can still deliver their original menu to in-house diners, but they’ll also create food for online customers with the help of third-party delivery apps. 

    How much does a restaurant franchise cost?

    Restaurant franchise costs depend on the unique partnership being pursued. Some providers might charge a lower start-up fee, lowering the initial investment to get operations off the ground, but charge higher ongoing fees. Others might charge a heftier start-up fee, but lower ongoing fees. 

    In other words, it varies from deal to deal, so it’s difficult to say exactly how much it costs. If you have a budget in mind, it pays to shop around to see what’s available. 

    If you’re concerned about having the budget to invest in the franchise, talk to us at Peckwater Brands. 

    The start-up costs for a virtual brand are often considerably lower than a dine-in restaurant. Plus, the money you put towards the virtual brand goes back into your business. It goes towards marketing, creating menus, and so on - all of which helps you boost your income. In fact, our partners report additional revenues of between £12,103 - £57,687 after adopting our virtual brands! 

    What is the monthly franchise fee for a restaurant?

    Estimating an exact figure is hard because it varies depending on the franchiser. However, franchisees should raise enough initial capital to cover the following:

    • The franchise start-up fee
    • 3-6 months of operational costs (such as rent, bills, and employee salaries)

    Although 3-6 months seems high, it’s better to put yourself in a position of security than to find yourself struggling 6 months down the line!  

    Work with a franchise partner to launch a virtual brand

    A restaurant franchise is like a delicious meal that requires teamwork, dedication, and a whole lot of flavour. If you're ready to sink your teeth into the world of franchising, then get in touch with the team at Peckwater! We can help you launch a virtual kitchen to generate more revenue and reach more customers in your local area.

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