The Five Fatal Errors Restaurant Franchisees Make


Don’t let your Entrepreneur Dreams Turn Bitter

BOOM Breakfast and Company is an Ontario-based restaurant chain in the breakfast and lunch sector. BOOM recently began offering franchise opportunities in Ontario to any entrepreneur looking to get involved in the restaurant industry.

We’ve been around for over ten years – and we’ve learned a few things in the rough-and-tumble restaurant game; and BOOM believes strongly that it will be successful by being open, honest, and forthcoming with its franchisees, both now and in the future.

So guess what – we’re giving away some restaurant franchise secrets – for free!
Five Fatal Errors Restaurant Franchisees Make. Avoid these very common mistakes and you’ll be well on your way to owning a successful franchise restaurant.

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1. You need three months working capital

The build phase is exciting, as your dreams go from concept to reality. Construction is an expensive and time-consuming endeavour, however; and when you’re finished, and that beautiful gleaming restaurant is ready, keep one thing in mind: you haven’t earned a single dollar yet.

Many franchisees find themselves, after the build phase, with every little spare cash – the cupboard is bare, in other words.

This is a very bad plan!

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It’s wonderful when you open your doors and crowds pour in. Most times success takes longer, and so revenues must grow over time. A little bad weather, road construction, staff turnover, or a million other possibilities in the first few months can threaten your entire operation if your bank account is empty when you open. The bills pill up, and you can’t pay.

We strongly recommend that you budget for at least three months working capital before you open your doors; that means enough cash to pay your bills for three months without additional income from your restaurant.

The restaurant business is unforgiving. Make sure you have the funds available to be successful.

2. Get a real franchise lawyer

Not the most exciting advice – and Disclosure Documents and Franchise Agreements are not the most interesting reading, either. Nothing could be more important to your success, however. A thorough understanding of both these documents is essential. Only an experienced franchise lawyer has the knowledge and understanding needed to provide you with the proper advice and counsel. There is no shortage of lawyers ready to take your money – but real franchise lawyers don’t grow on trees. Take the time to find the right lawyer.

Franchise law is an inch wide and a mile deep – don’t get trapped down that hole. Don’t be a do-it-yourself franchise lawyer. Misunderstandings and errors in law are like the gift that keeps on giving – and they can cost you your franchise.

3. Don’t be seduced by the first franchise you see

Love is a wonderful thing – and none more than love at first sight. We see it all the time in the restaurant game. People met a single franchisor and decide that’s what they want.

Certainly, there’s nothing wrong with trusting your gut – but give your gut a chance to see a few franchises. The search for a franchise is time consuming and often painful, but that’s no reason to settle for the first franchisor that comes along.

Like with real love, it’s often necessary to date a bit. Sure love at first sight happens, and if it does and your gut tells you to commit, then go for it. More often it is more advisable to go to some trade shows, check out the competition, look over the market, and only then make the decision to apply for a franchise.

4. You work more (and harder) in your own business, not less.

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It’s a wonderful thing to own a business, to build it up and see it grow. At the same time, there’s nothing wrong with working for others. Not everyone is cut out for the restaurant game. For people with an entrepreneurial bent, however, there’s nothing like being your own boss.

So please don’t look at a franchise restaurant like a job. The buck stops with you; and that means you have to step up when the situation calls for it. If someone quits, if an early Saturday morning shift won’t get filled, then you will be the one to deal with it.

Plan to work harder than you did as an employee. Plan to set the example to your staff, to raise the bar. There is no better recipe for success than hard work.

5. Size (of the franchisor) really does matter.

Before you start your search, or before you become too deeply committed to a single franchisor, you should give thought to the size of the franchisor you want to work with. There are three basic categories: Huge, Medium, and Small. Each has its advantages and disadvantages, like all things – and you would be well advised to take them into account before you sign that franchise agreement.

Do you like the look of this?

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Or this?

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Or Something in between?

The Huge Franchisors offer stability, a proven model, and enormous advertising budgets. They’re also very expensive, inflexible, and offer virtually no protection in terms of where they will put another location. They might allow a franchise right across the street, and there’s nothing you can do. It’s also far more difficult for new franchisees to get a location – most go to established owners.

The Medium players are not as rigid in terms of control, but without the marketing power and deep financial pockets of the monster players they are vulnerable to market fluctuations and competition.

The Small Franchisors represent an opportunity to get in on the ground floor, and also allow the franchisee to take an active role in building the franchise. It is also much easier and less expensive to buy additional locations. The potential rewards are therefore the highest, but then again so are the risks.

There is no right or wrong answer when it comes to the size of the franchisor. That depends on your tolerance for risk and your preferred work environment. It will have a tremendous impact on how much you enjoy your franchise experience, so please give it your full consideration.

You’d be shocked how often these five common errors are made, especially by first-time franchisees. Before you even begin your search, make sure you’re not making the same mistakes – and every month or so do a recheck to be certain you’re not slipping up.

There are few things in life more fun than owning a successful restaurant – and few things more painful than owning an unsuccessful one. That success, or failure, is dependent on many things, but one the most important factors will be the work put in before you invest. The errors made prior to signing a franchise agreement never go away, and in fact, often get more and more pronounced. Build a solid foundation for your restaurant and you will be in a position to exploit the tremendous advantages a franchise offers.

BOOM Hospitality Inc. is an Ontario-based franchisor in the Breakfast and Lunch Restaurant sector, operating under the trade name BOOM Breakfast and Company. Check BOOM Breakfast and Company out at www.boombreakfast.com.

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