If you look up the top 10 franchises in the world today, you’ll find that only three of them aren’t part of the F & B industry.
Clearly, franchising is quite common among restaurants. As food joints and cafes achieve high levels of growth, they often turn to franchises as a way of expanding their business.
With cloud kitchens becoming more and more popular, this business model is not one to shy away from franchising either. And why not?
You get the perks of a new revenue stream through royalties and also more recognition across different locations. But sometimes, franchising can be like taking a leap in the dark. So how do you know whether you should take the plunge?
In this article, we’re going to discuss the 7 things you absolutely need to keep in mind before you franchise your cloud kitchen.
In order to franchise your cloud kitchen, you must have a fairly successful business already. By franchising a business that has achieved only minimal success, you’d be setting yourself up for failure.
Ensure that your current cloud kitchen has smooth operations, makes good profits, and is doing everything right. Experts recommend that your cloud kitchen has a track record of consistently high returns over the span of at least two years before you consider franchising. Zero in on your financial statements to help you examine the feasibility of expanding.
Once you’re confident that the methods you use yield successful results and a solid ROI, you can choose to look for a franchisee.
Think of the most successful franchises you know of. What do they have in common?
Each renowned franchise has an identifiable brand, something that sets it apart. There’s usually a specific theme, font, set of colors that customers begin to associate with such a brand.
Before you franchise your cloud kitchen, make sure you have a particular brand set in place. Customers need to be able to differentiate your cloud kitchen from the hordes of restaurants out there that offer the same cuisine.
You can strengthen your branding by putting a logo in place that paints a picture of your business and what it does. Pick a color scheme and overall aesthetic that customers can recognize easily. Make sure it is starkly different from your competitors’ branding. Pick distinct packaging that matches the cloud kitchen’s theme too.
You need to achieve brand consistency on all platforms possible- restaurant app, packaging, advertising, and so on. Strive to create a “hook” for your restaurant that really stands out! A strong brand identity that sets your business concept in stone makes franchising more practical.
While establishing your cloud kitchen, you probably had some unique ideas you wanted to bring to life. These could be anything from a large, diverse menu to highly innovative dishes that require tons of time and practice to perfect. And while there’s nothing wrong with that, such a menu could pose problems to other chefs and managers in the world of franchising. Not every chef you find will have the same skill set.
So, while it is good to have a unique, funky menu, it also needs to be easy to execute by other chefs out there. Try to edit your menu in a way that doesn’t immediately overwhelm a new entrant.
Also, it’s wise to introduce more and more high-profit menu items that can lead to high returns. Focussed menu engineering can do wonders in improving performance, but it also simplifies operations for your franchisees.
Deciding to franchise your cloud kitchen can be a great idea, but you need to have the funds for it. It is essential to be as realistic as possible about the cost of launching your own brand.
While franchise fees and royalties can add a lot to your existing revenue, you need to have enough funds to go hand in hand with your company’s growth too. If your cloud kitchen is a new entrant to the restaurant scene in your area, finding potential franchisees can be tough. A good reputation and high profits might be perks that you bring to the table but the price of generating leads can cost you well above fifteen thousand dollars.
Partnering with a franchise broker can be helpful too but it may cost anywhere between 40 and 60% of the initial franchise fee. Apart from this, you also need to account for legal fees to seal the deal, register your trademark and make payments for state registrations. Training costs for new franchise employees can be burdensome too.
It takes due diligence to make a restaurant work. If you’re passionate about your cloud kitchen, it’s possible that you spend all your working hours there, finding ways to make it better. You probably stick to a certain way of running your business too. But let’s face it, not everyone is going to run ship in the same manner.
You can enforce certain standards for franchises but ultimately the day-to-day management will lie in someone else’s hands. So, it’s important that you’re ready to let go of complete control over your brand.
This factor is a staple in the franchise world. Your cloud kitchen should be based on a concept that is scalable and can be systemized and standardized without much hassle.
Every franchise you have needs to represent your cloud kitchen and its brand image. As a whole, the guest experience needs to remain the same. This includes identical recipes, portion sizes, packaging, customer support- virtually every process involved in daily operations. If it isn’t possible to have this kind of uniformity across franchises, steer clear of franchising.
As a franchisor, you will be expected to offer a helping hand to your franchisees. Over the span of just a few weeks, you need to be prepared to give hands-on training to a whole new team on how to run the business. This means devoting time and manpower.
You also need to get across the necessary know-how by creating material such as marketing plans, SOPs, checklists, manuals, and so forth.
Analyze whether you’re ready to offer this kind of support. Do you have the means for it? If yes, go ahead with franchising! If not, maybe you should take a step back.
We hope this checklist was helpful! If there are factors that signal maybe you’re not quite ready to franchise right now, don’t worry.
Enforce the necessary changes to your cloud kitchen. These may not take place overnight but you can always franchise sometime in the future, once your business is better equipped to deal with it.
Good luck!
