Food Franchising Consulting
Franchising in F&B Business
Franchising is a time-tested strategy for business growth and expansion. The long list of successful brands comprising names like KFC, Pizza Hut, Domino’s, Burger King, Taco Bell, McDonald’s, and Subway are a glaring example of the effectiveness of franchising. However, the triumph of the franchising model is not limited to only big names. Today, a large number of small and medium food enterprises like restaurants and cafes use the franchising route to grow their businesses and expand their markets. In many places, the food franchise business model has even turned hyperlocal. More industry insights and business solutions are discussed ahead.
Most Sought-After Verticals in F&B Franchising
Restaurants
The restaurant business is probably the most popular vertical when it comes to franchising.
In restaurant franchise models, an existing business (franchisor) allows another business (franchisee) to operate a branch or outlet (the franchised outlet). From the perspective of franchisees, these businesses seek to reap the benefits of an established brand name (of the franchisor). This model can take unique shapes and forms depending on how a franchisor and franchisee agree to make the franchised business work for mutual considerations and interests. For example, in the FOCO model restaurant franchise, the ownership of the offspring business remains with the franchisee but the operations are carried out by the franchisor.
Franchising in the restaurant business has many advantages for both franchisors and franchisees. Franchisees gain access to a proven business model, ready-made brand recognition, marketing and operational support, advanced business systems and technologies, etc. On the other hand, franchisors get the opportunity to expand to new markets, counter competition more effectively, alleviate risk exposure, etc.
As restaurant franchise consultants, YRC maintains that it is imperative for franchisors and franchisees to carry out research and analysis on the industry, markets, competition, trends, supply chains, key partners, consumer behaviour, demographics, financial and commercial aspects, and legal and regulatory environment.
F&B Kiosks
Typically, the Kiosk model is a small-mobile format type of F&B business that deals in readymade or quick items like tea, coffee, ice creams, shakes, etc. The Kiosk model is also popular with products like dumplings, noodles, or other street fast food. However, the kiosk model franchise is most common in the beverage category. If visiting a market or shopping mall, it is highly likely to come across one or more kiosk stalls. These kiosks are often outlets of local brands and businesses. Because of the simplicity of installing and operating a kiosk, kiosk-based F&B franchising is one of the simplest forms of franchising. This model works best for small businesses and simple products.
The links to two case studies explaining how YRC has helped two brands achieve scale and expansion – Yewale AND Kiosk Kaffee are provided at the end.
Café
The café business is a popular choice among contemporary entrepreneurs for an F&B business. There is a strong conviction that they understand the needs and aspirations of customers from the same age group as them. Although starting an independent brand is a more popular choice among these new-age café business owners, the effectiveness of franchising cannot be negated. There is access to an established brand name, a proven business model, operational and marketing support, etc. Franchisors may even provide direction and input for developing a strong cafe franchise business plan.
Confectionery Retail
In confectionery retail, franchising can be a slightly tricky affair. Local SME confectionery retail businesses with a fair amount of success and popularity tend to reflect reluctance in seeking business growth and expansion via the franchising route. Confectionary products like cakes, pastries, cookies, sweets, or sandwiches come with a touch of localised expertise and experience of the business owners. This causes apprehension that franchisees might not be able to deliver the same touch in the products. Trust and confidence combined with robust franchise SOP manuals help overcome this barrier. In confectionery franchising like a sweet shop franchise model or a dry fruits business franchise, three critical considerations are the maintenance of trade secrets, SOP-based operational planning, and transparency and consistency in reporting, auditing, and other controlling measures.
Hotels
Since the middle of this century, the hotel franchise business model has emerged as a popular growth and expansion strategy. The formula has worked well for numerous hotel brands around the world. However, like any other business model, hotel business franchising has also undergone its fair share of changes. Today, hotels and branded hotel chains are embracing the asset-light strategy. The emphasis on localisation strategy is too good to be messed with. An interesting development is the adoption of a sub-brand strategy to cater to different market segments.
How YRC can help
Franchise Strategy Development
Formulating a franchise strategy is about evaluating the effectiveness of franchising as a growth and expansion strategy and preparing the blueprint for the execution. Every business has a unique positioning, constraints, and competencies. There is no universal-size franchise strategy. In formulating a franchise expansion strategy, tailoring is of utmost importance. It involves charting the most feasible roadmap and model that is mutually beneficial to both the franchisors and franchisees. It also entails the assessment of different franchise formats and solutions. YRC’s objective is to help clients come up with the franchise expansion strategy that is best for their business under the given set of conditions. YRC’s franchise development specialists also assist in developing master franchise structure and international franchising plans for speedy application, adaptation, and expansion.
Franchise Model Development
In developing franchise expansion strategies, one of the most common pertinent decisions to be made is the selection of the base franchise model. YRC’s team of franchise development consultants carries out extensive tests and analysis to evaluate the suitability of various standard franchise models like FOFO, COCO, FOCO, COFO, and also, hybrid franchise models. The team analyses a multitude of factors concerning each model to determine this suitability. Local and hyperlocal market conditions are also taken into account.
Franchise Operations Manual
In offering the service of developing franchise operations manuals, YRC’s goal is to help clients become process-oriented enterprises and achieve operational excellence. These manuals constitute a documented reference to help business processes in tandem with the established operational standards and requirements. These manuals also serve as a point of reference to both franchisors and franchisees on deliverables.
Franchise Legal Advice
With the right planning and implementation, franchising is a powerful strategy for accomplishing quick business growth and expansion. However, it is also important to safeguard the brand name and goodwill of the business partners tied in a bond of franchising. It is important for franchisors and franchisees to draw the lines and keep their expectations transparent in the form of contracts and agreements.
In franchise legal advice services, YRC offers assistance in drafting franchise agreements and franchise disclosure documents, and formulating franchise exit strategies. Proven principles and established processes are followed towards securing that these agreements and documents are free from doubts and defects.
Some of the popular franchise agreements covered by YRC include:
- franchise agreement for food outlets,
- restaurant franchise agreement,
- tea business franchise agreement,
- Other paperwork of a similar nature.
Franchise Audit Report
YRC offers all-inclusive auditing resolutions for franchise businesses. YRC’s franchise audit reporting solutions are developed in consideration of the operational, commercial, and contractual requirements. The objective is to help clients keep a steady and reliable watch over the health and strength of the franchise business. Audit checklists are also provided so that audits can be carried out independently by clients.
Franchise Lead Generation Strategy
One of the most important requirements of a franchise business plan is identifying the marketing channels for franchise lead generation. In consideration of the budgetary objectives established in the franchisor business plan, YRC determines the best-fit lead generation and marketing strategies for the franchise business.
Franchise Setup Manual
After the commercials are finalised in the franchise store business plan and the paperwork is completed, the timelines for setting up the franchise business become critically important for both parties. YRC’s tested and proven franchise setup checklist solutions customised to meet the specific case requirements serve as ready-to-go maps in setting up the business.
Franchise Business Proposal
After verbal discussions and meetings on a franchise business opportunity, what follows is the need for documented evidence or sample broadly highlighting what has transpired between the parties so far. This document is referred to as the franchise proposal document. It is like a pitch-deck document meant for potential investors highlighting the macro picture of a business opportunity. Sometimes it can also include detailed reports and analysis. YRC deploys franchise pitch deck professionals along with creative designers and copywriters in developing these proposals. The customised templates and samples used are proven and tested over time with high success rates.
About Your Retail Coach
Your Retail Coach is a retail & eCommerce consulting house with more than 10 years in business. YRC specialises in customised enterprise solutions for startups and existing brands and businesses. With a rising international trail and a success ratio of 95%, YRC has served over 500 clients across 25+ verticals. In F&B franchising consulting, YRC offers a comprehensive package of services and solutions encompassing planning and implementation for franchise business setup and rollout.
For customised and ready-to-go solutions for business setup, management, and expansion or to speak to one of YRC’s franchise business consultants.
FAQs
How to start franchise of my food business?
If you want to franchise your food business, these are eight steps to be followed:
Step 1: Make your company profitable. Nobody will invest in a loss-making brand. Create a niche. Define the value chain.
Step 2: Develop a franchise expansion strategy for franchising your business. Identify and examine the market potential and assess the prevailing and potential competition.
Step 3: Develop the franchise working model. Assess and make a decision on the best-fit model for franchising your business. Popular models are FOCO, COFO, FOFO, active franchise model where you turn your own store into a franchise store, or any other hybrid model.
Step 4: Develop franchise operations manuals that will provide directions to franchisees on the practices and processes to be followed in operating the franchised business.
Step 5: Draft franchise agreements defining the terms and conditions of the franchising covering the rights and liabilities of both parties.
Step 6: Develop a guidebook containing instructions on business aspects site selection, lease negotiations, and the purchase of assets and inventory.
Step 7: Draft a business proposal pitch deck for the potential franchisees highlighting the advantages of franchising and the scope of success.
Step 8: Formulate strategies for lead generation and attracting potential franchisees. This could be a part of the franchise business plan (financial and commercial assessments).
Note: There is a reference to this answer from the next question - How to start franchise of my food business?
How to franchise my restaurant?
First, touch upon the basics of franchising a restaurant business:
- You have to ensure that your restaurant business is profitable
- Your restaurant business must be scalable
- Your restaurant brand must have a “niche” as a competitive leverage
- You must get your brand name and trademark registered by the appropriate authority
Now follow the steps outlined in the answer to the above question – How to start franchise of my food business?
How much will it financially cost to franchise my business?
The exact figures may vary. Here are some of the important costs involved in franchising a business:
- Purchase/development of systems/software for franchise business operations
- Hiring/expansion of teams to execute/support franchise business operations
- Investments into assets to establish/boost the capabilities of the value and supply chain
YRC Franchise Consultants advocate developing a franchise business plan encompassing:
- Sales and Operations Plan for at least 5 years
- Financial & Commercial Plan for at least 5 years
- Franchise Breakeven Period, CAPEX, and OPEX
- Franchise ROI and ROC
- Franchise Exit Terms and Financial Ramifications
- Franchise Revenue-Profit-Sharing Model
Is my business ready to franchise?
To ensure your business is ready for franchising, your business must meet the following four conditions:
- Your business is profitable
- Your business is scalable
- Your business/brand has a “niche”
- Your business has a registered trademark (under application included)
How do I sell my franchise business?
Here are some essential points for your consideration as a would-be franchisor:
Don’ts
- Do not go for any 3rd-party model; commissions and fees are okay
- Do not pitch franchise proposals without criteria; maintain privacy
- Do not deviate from your documentation and documentation procedures
Do’s
- Form your own team for attracting and generating franchise leads
- Be meticulous with the initial 4-5 franchisees before getting into paperwork: these initial entities will serve as your brand ambassador for the next fifty franchisees
- Develop and implement SOPs for managing leads till onboarding and operations
- Use delegation
Case Studies
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