Franchising vs. Entrepreneurship: What’s Right For You?

You probably won’t have a hard time naming the most profitable restaurant franchise. That would be McDonald’s with total sales in 2014 topping out at $35.6 billion and the average sales per individual stores hovers around $2.6 million. Not too shabby!

Before focusing on the best place to invest your money, you might want to consider if franchising will be a good fit for you. The alternative would be starting your own restaurant from the ground up. Here’s what you should consider with opening a franchise:

Topics of Discussion

• The Power of the Brand
• The Level of Control
• The Business Model
• The Purchasing Power

1. Whether you go into a McDonald’s in London or a Hot Dog on a Stick in Bakersfield, you can depend on the same menu options which is something that loyal customers appreciate. Once a brand has been established, customers will often go out of their way to find the food they like at those outlets. If you only have one opportunity for a meal, do you want to take a risk on an unknown restaurant or stick with what you know? Most customers spend their hard earned money on dependability.

2. If you open your own restaurant, you are mostly in control of your day-to-day operations. Every element from staff hours to the items on the menu will be yours to decide but you’ll be required to meet certain minimum brand requirements. That can be equal parts overwhelming and intimidating. Suppose you get it wrong? On the other hand, investing in a franchise means you will be giving up some of that control but that can be a benefit. With all the other things you need to focus on, do you really want to taste test menu options and hope customers will like them? Or would you rather have a menu that has already proven itself?

3. Most successful franchises don’t get that way overnight. It takes years of trial and error to work out the kinks in the business model. Even adapting recipes and menu selections need to develop over time. As an investor in a franchise, all of that work has been done for you. You’re essentially stepping into a kind of turnkey business that is ready to run. The most profitable restaurant franchise got there because they know what works even if it took them twenty years to find that out!

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Disclaimer: This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of or want to locate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. Franchise offerings are made by Franchise Disclosure Document only.