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Thursday, January 16, 2025

Starting a Franchise in the Restaurant Sector: keys to long-lasting success

Starting a franchise in the restaurant sector attracts many entrepreneurs because it offers advantages for both franchisees and bankers. Franchising is often seen as a reassuring model: franchisees benefit from a proven concept and support, while bankers view it as a structured and less risky option compared to starting a business independently.

But what exactly is franchising? This model is based on a collaboration between two parties: the franchisor, who shares their expertise, brand, and tools, and the franchisee, who operates the concept within a defined contractual framework. In the restaurant sector, this model is particularly dynamic: 84% of franchisors opened at least one additional location in the past twelve months, according to the FFF report released in March 2024.

However, before embarking on this journey, it is crucial to carefully examine the challenges and prepare each phase thoroughly. In this article, we outline the key steps to successfully launching your restaurant franchise project.

Asking the Right Questions

Before choosing a franchise brand, it’s essential to take a step back and evaluate the relevance of your project. Start by assessing whether the franchise theme aligns with current trends. A franchise in a thriving sector, with strong growth in openings, increasing revenue, and proven profitability, will have a higher chance of success.

To do this, don’t hesitate to meet not only the franchisor but also other franchisees in the network. These discussions will provide you with a comprehensive and practical understanding of the brand. Also, verify the sustainability of the concept: in a market where restaurant concepts have increasingly shorter lifecycles, choosing a network that adapts and innovates consistently is crucial.

Finally, research the franchisor’s reputation and financial stability, as a robust network ensures peace of mind and long-term success.

Ensure You Have the Necessary Qualities and Mindset

Being a franchisee doesn’t simply mean "buying" a turnkey model. It requires a specific mindset: strictly adhering to network standards while also being proactive in contributing to the brand's evolution.

The ideal franchisee must possess essential qualities: above all, they should be a good businessperson, capable of building strong customer relationships and energizing their location. They must also be a meticulous manager concerned with profitability and an experienced leader able to guide and motivate their teams.

Additionally, it’s vital to have the ability to apply and enforce strict processes defined by the franchisor, which ensures network consistency and performance.

Resilience is also an essential quality to face daily challenges and fully commit to the project.

Investigate Financing and Support Criteria

Before starting a franchise, it’s essential to ensure you have sufficient resources to cover various costs, such as the entry fee, which varies by franchise, installation and launch expenses, and costs for creating a legal entity.

A 2022 Libeo study on franchising revealed that only 8% of franchises require an entry fee of less than €5,000, while 26% demand an entry fee exceeding €20,000.

If you lack the necessary personal contribution, other solutions are available to finance your project: business creation aid (ACRE), honor loans from networks like Réseau Entreprendre, France Active, Initiative France, solutions from Bpifrance, or a simple bank loan. Most banks offer specific financing and support options for franchise creation.

Bank loans are the most common financing option, accounting for 61% of sources.

Numerous financing methods are available, and it’s important to explore all possibilities to find the one best suited to your project.

Meet Consumer Expectations

The restaurant sector evolves rapidly, making it essential to adapt to new consumer expectations. Several aspects should be considered:

Analyze your target audience to define your positioning: Based on your location, what types of customers are in your trade area? This helps determine the product range.

Understand different needs based on timing: Customers visiting a counter-service establishment often seek speed, whereas those choosing a table-service restaurant look for a memorable experience.

Visually appealing and indulgent dishes are now a widespread trend, often shared on social media. This applies to both counter-service (e.g., street food, "food porn") and table-service restaurants (e.g., immersive décor, elegant presentation).

By taking the time to reflect on consumer expectations, you’ll be better positioned to select franchises that cater to these needs.

Analyze Market Trends

Innovative concepts from abroad, such as Sweetgreen or health-focused brands, are gaining popularity. However, to succeed in France, these models must be adapted to local market specifics, including opening hours, a diversified culinary offering, and an immersive customer experience.

Enduring concepts often combine innovation, personalization, and well-being while meeting the demands of customers seeking pleasure and quality.

For instance, the Tohana franchise offers a creative concept centered around sushi, poké, and gyoza. Positioned as a premium brand, Tohana aims to deliver a unique customer experience through culinary excellence, warm service, immersive décor, and an open kitchen where dishes are prepared in front of customers.

Choose a Network Offering Strong Support

The restaurant sector is complex, requiring expertise in management, operations, and hygiene standards. Before committing, ensure the franchise network provides a comprehensive training program and ongoing support.

A good franchisor should also assist in monitoring your establishment's performance and suggest solutions for improvement. This close relationship is a vital lever for rapid and steady progress.

The Pizza Cosy franchise, for example, provides extensive support, training new franchisees for six weeks on management, labor law, and operational know-how in dedicated training restaurants. Ongoing support continues throughout the franchise agreement.

Such support is indispensable for a successful franchise journey.

Take Time to Find the Right Location

The choice of location is a critical factor in the success of a restaurant. Prioritize high-potential locations, whether in busy neighborhoods or high-traffic zones.

Key criteria include:

Visibility: The location should be prominent, ideally near a busy thoroughfare.
Foot traffic: Analyze daily activity levels and identify peak times.
Rent cost: Ideally, rent should not exceed 10% of your revenue to ensure profitability.

Consulting a market research firm can help validate the suitability of your location choice. It’s important to estimate your trade area and the profiles of those living and working there, comparing this data to your franchise’s positioning.

Carefully Select Your Team

Your staff represents your restaurant’s image. A warm, professional, and motivated team can significantly impact customer satisfaction and loyalty.

To avoid costly turnover, hire motivated candidates and invest in their training. Training shouldn’t end at onboarding; offer modules on customer service, product expertise, internal processes, and addressing specific consumer expectations. A strong team is a strategic asset for delivering a positive and lasting customer experience.

Don’t Rush into Signing Your Franchise Agreement

The franchise agreement is a crucial document binding both parties for several years. It outlines essential aspects such as brand usage rights, royalties, franchisee and franchisor obligations, and renewal or termination conditions.

Before signing, consult a lawyer specializing in franchise law. They can help you understand key clauses and assess your rights and obligations. This precaution will secure your investment and allow you to start your business within a clear and controlled legal framework.

Starting a franchise in the restaurant sector is an entrepreneurial adventure requiring meticulous preparation. This model, appreciated for its structured framework and potential for success, balances innovation with adherence to network standards. Every step, from market analysis to selecting a location and team, plays a crucial role in the project’s success.

Choosing a franchise that adapts to market trends and meets consumer expectations is essential, as is ensuring strong support from the franchisor. This includes comprehensive training and ongoing assistance to ensure performance and consistency across the network.

However, success in franchising isn’t limited to implementing a proven model. It requires a specific mindset, effective management skills, and the ability to anticipate industry developments. By taking the time to analyze each aspect of your project and partnering with the right people, you’ll be ready to tackle the challenges of the restaurant sector and build a thriving business.

In summary, thorough preparation and full commitment are the keys to turning this opportunity into lasting success.