If you are thinking about opening a restaurant, you may be wondering whether it is best to open a franchise location or a new, independent business. There is no right or wrong answer as both options have advantages and disadvantages that will suit the needs of different people. Here is what to know about each possibility.
Definitions
A restaurant franchise is when a company sells a license to an entrepreneur to open a location. Products and offerings are consistent across all locations of a franchise. Most major restaurant chains are franchised, including McDonald’s, Subway, Taco Bell and Domino’s Pizza. An independent restaurant is when an entrepreneur starts their own business and opens a completely new restaurant. Independent restaurants can open other locations, but they will still be owned directly by the original owner.
Franchise Restaurants Offer More Support
Because you are buying a license to open and operate a location of an established brand, franchise owners have much more support. Branding, for example, is already done for you, and while you may be responsible for some marketing efforts customers are likely to already be familiar with a particular franchise. This often makes it much easier to get people in through the door. The parent company will aid in marketing as well. Your menu items have already largely been decided upon and you will have established resources for staff training, equipment and supplies. Plus there is less uncertainty about whether the restaurant will be successful, as established brands have already proven their appeal to customers.
Independent Restaurants Offer More Freedom
Independent restaurants, meanwhile, offer owners much more freedom. When operating a franchise restaurant, you have little choice over the layout of your restaurant, the menu items you offer, the decisions you can make and more. When you own an independent restaurant, you are free to decide these details for yourself. The ability to be creative and have decision-making power is understandably appealing. Startup costs for an independent restaurant are also typically less than those of a franchised restaurant, and because you are not paying royalties to the franchise, you get to keep all profits. The major downside is that there is a lot more risk associated with opening an independent restaurant, especially for someone with little to no experience in the industry.
As with so many other business decisions, both independent and franchise locations have their pros and cons. Which you should choose is largely up to how much effort you want to put into growing the business, how much capital you have on hand and what you are hoping to get out of owning a restaurant. Both options have the potential to bring you success as a restaurateur.
