When a restaurant is doing well and the owner is making a profit, the next logical move is to open additional locations. Due to a lack of available time and capital, many owners of successful restaurants want to grow their businesses through the franchise model.
If you’re one of those restaurant owners looking to grow your restaurant business in India, one option is to open a franchise restaurant. In this model, you, the franchisor, grant the franchisee a license to use your trademark, business model, and processes in exchange for a fee.
Here is a step-to-step guide, with some very important tips which can help you expand your restaurant business with the franchising model.
Franchise Your Restaurant Business in India in 10 Simple Steps
Most people believe that opening a restaurant franchise is a lengthy and difficult venture. However, this is far from the truth. Franchising a restaurant takes time and work, but it is not any more difficult than any other type of business expansion.
Here are ten easy steps to follow if you’re thinking about expanding your restaurant business into the world of franchise restaurants.
Step #1: Analyzing Your Current Business Model
You need to take a comprehensive look at your business before you go out and find investors and distribute your Franchise Restaurant License. Ask Yourself:
- Is your idea scalable? Here are the most crucial aspects you must ask.
- Is it possible to systematize and standardize? Franchised businesses often fail because their outlets don’t live up to the same quality standards as the parent company.
If the Franchise Outlets are unsuccessful, the Brand Name could be tarnished. Additionally, the present method of doing business must yield a profit. Consider the five-year franchise return and the first-year cash flow cost structure.
Structure cost generally includes:
- Initial setting up cost
- Infrastructural developments costs
- Inventory required
- Marketing plans
- Technology required
- HR
Step #2: Having an Efficient Process in Place
If your idea can be replicated successfully, you’ll need to set up a reliable and effective procedure to guarantee uniformity between locations.
The most important ones are-
- Reporting and Monitoring of Sales
- Inventory Management System
- Logistics Planning and Control
- Management of Suppliers
- Controlling Compensation and Bonuses
- Staff Development
Keeping track of the finances of several different Franchise Restaurants is no easy feat. Because of this, the use of Franchise Management software is useful in fixing the problem.
Step #3: Registration of the Trademark & Logo
Giving someone a franchise for your restaurant means they can use “Your” trademark and logo. Thus, the most crucial, yet frequently disregarded, step in franchising your restaurant is registering your brand’s logo and securing a trademark.
When considering opening a chain of restaurants, trademark registration is crucial. Franchisors should register their intellectual property to safeguard it from a fraudulent Franchisee.
Step #4: Estimation of costs involved
After settling on the procedures, you’ll need to calculate how much money and time will be needed to get your Franchise Restaurant up and running. The best restaurant franchise models have been successful because they have accurately predicted costs and have reduced food costs wherever possible.
All possible categories of costs should be accounted for. Divide the initial investment based on the concept of your restaurant. Some of the costs estimated are:
- Infrastructure – Location, interiors, electricity, furniture, and branding.
- Licensing & Establishment Costs – GST registration, VAT, and any other licenses.
- Franchise Fee & Royalty Charges
- Working Capital at least for a few months.
Step #5: Cash Flow and Financial Forecasting
Think about the Cash Flow and Financial Projections based on your restaurant’s history and present sales. The franchisor needs to calculate a cash flow for expected profits by multiplying the daily order volume by the typical order value.
Additionally, the franchisor should calculate a 12-month projection of the franchise’s average growth rate. In addition, please forecast earnings over the first five years/franchise duration.
Step #6: Create a Brand Profile
Create a Brand Profile to help you connect with your Franchisees on a deeper level. You have to be in the ballpark to compete with the best Indian restaurant chains. The brand’s intended direction should be outlined in these papers.
In addition to the store’s opening date and location, it should explain the brand’s mission and briefly describe the goods and services to be sold.
You should also detail the pre- and post-opening assistance you’ll be offering the restaurant franchise. This will allow you to establish a standard for your brand.
When you franchise your restaurant, there is a risk that you won’t be able to maintain the same high standards that made the original location successful. Avoid this by instilling a culture of brand loyalty from the get-go.
Step #7: Franchise Agreement
Since there are no rules that apply solely to the restaurant franchising industry, it is crucial that the franchisor and franchisee have a legally binding contract.
Payment, strategy, duration, timing, royalties, and franchisor support should all be spelled out in the Agreement. After a business is established, Franchise Restaurants can stop paying the royalty.
Step #8: Training of the Staff
Staff training is crucial to ensuring consistent quality with the original Franchise Restaurants. The franchisor is responsible for teaching everyone from the head chef to the dishwashers.
New hire orientation and training should be completed well in advance of the Franchise Outlet’s grand launch.
When opening a new location, it is common practice for successful franchises to hire a small number of staff one month in advance and then send them to observe and learn from the operations of current locations.
Some franchises even use the original location’s staff to help train the new franchisees.
Step #9: Advertising and Marketing
The franchisor can either assist the franchisee in marketing and advertising by including it in the original plan or by helping the franchisee understand the market and execute marketing efforts on their behalf in the early stages.
Providing franchisees with detailed Brand Guidelines to follow is crucial.
Define in detail the responsibilities of the individual Franchise Outlets, such as maintaining a social media presence, registering with restaurant review sites, etc. To guarantee uniformity in all locations, remember to supply menu templates, logos, and other Brand-specific items.
Step #10: Assistance & Support
What assistance the franchisor will provide should be spelled out in detail. Some franchisors just provide help with things like setting up shop and running it, while others also provide things like raw supplies and training.
In order to avoid misunderstandings in the future, it is important to include support in the Agreement.
It’s not easy to build on the reputation of a well-established eatery. Among the many difficulties encountered at each tier is the constant struggle to keep the quality of the food and service consistently high.
Also Read: Here’s how you can expand your tea cafe business in India.
Franchise Your Restaurant Business in India – FAQs
Q.1. what are the three-must have things to expand your restaurant franchise in India?
A profitable business model, an easily replicable model, and protection of your brand are very important before you franchise a restaurant business in India.
Q.2. Is it profitable to franchise my restaurant business in India?
The Indian food industry is booming over the years and is expected to show continued growth. This is because of the rise in disposable incomes of households and people eating out. So if you are a restaurant business owner, this is the right time to franchise your restaurant business.
Conclusion,
Franchising especially in the Food & Beverage Industry to open new restaurants is becoming increasingly common. Several well-known companies, both large and small, are using franchising to spread their name over the globe.
Therefore, we hope our article has been useful to you as you plan to expand your restaurant business in India. Contact Sparkleminds for more details on franchising your business in India.
