Hotel franchising is a very popular concept. One of the most significant reasons individuals become restaurant franchise owners is because they get to benefit from instant brand recognition and gain the trust of consumers that generally takes many years to build. This familiarity and reputation allows an owner to instantly take over a franchise, without needing to start from scratch to gain a customer base. New franchise owners benefit greatly from this scenario of an immediate customer following, and are able to reap the rewards since the franchisor has already taken the risks, learned the ropes, and survived so new owners don’t have to.
Yum! Brands – KFC, Pizza Hut, and Taco Bell – is the largest restaurant company in the world with over 33,000 system units. Yum! offers four category leading brands and over 50 years of franchise support. Along with its franchisees, Yum! spends over $600 million in annual advertising to build its brands. Development opportunities are available for both single brand and multibrand units which feature two brands in one location. Not all brands are available in all trade areas.
It’s not mandatory, in that there are no legal requirements, that a restaurant be profitable before franchising. However, one of the major selling points to a franchisee is that the business generates an income. Franchisees want to see a restaurant that is making money over a time period of several years.
You also need to mention what kind of support you would be providing to the restaurant franchise before and after the establishment. This will enable you to induce some level of consistency in the brand. As mentioned earlier, consistency may be lost when you franchise your restaurant, which will tarnish the parent brand’s reputation. To avoid such a situation, create a culture of adhering to the brand values from the start.
The UFDD is the requirement by the Federal Trade Commission to offer and sell a franchise. There are 23 points of disclosure in this document. It is very similar to a prospectus for a stock or a bond. In addition to federal compliance there many states which have some form for additional requirements as well. This is the time when engaging with an experience franchise attorney is important.