Opening a fast food franchise: the ultimate guide

You've been itching to open a fast food franchise, yet you still haven't taken action. What are you missing? A little motivation, a practical guide, more information?

It's a good thing, we explain you step by step the whole process of opening a franchise!

In this article, we address the beginners who are not daring, the professionals of the sector whose project is still vague and all those who simply do not know how to do it.

Follow the guide! 👇

‍

The franchise in a few words 

You are probably already familiar with the term franchise, but a little reminder never hurts.

It is simply a contractual relationship between the franchisor and the franchisee. In concrete terms, the franchisor rents the brand and the know-how he has developed to independent entrepreneurs, the franchisees, so that they can open new points of sale.

Franchisees have the right to use the franchisor's business model and brand to sell its products and/or services. In exchange, the franchisee pays royalties. 

The fast food sector has been marked by a strong increase in the number of franchises. In 2021, France will have 210 franchised brands, i.e. 6919 franchised sales outlets in total! Think of brands like Starbucks, McDonald's, Burger King, Subway or KFC...

‍

Is opening a restaurant franchise right for me?

Today, you may still be hesitating between 2 options:

• start your own fast food restaurant,
• or open a fast food franchise.

Together, we'll explore Option B, which is a somewhat special business creation. 

Advantages of the franchise

Your personal contribution is limited? Your experience in restaurant management is limited? You don't have the time to communicate and promote your brand?

Everything seems to indicate that the franchise is made for you! 

Indeed, by opening a franchised restaurant rather than an independent one, you benefit from :

• Low start-up costs: the initial cost of the franchise is lower than that of opening a restaurant. 
• Ongoing support from the franchisor and a support network to deal with the obstacles you encounter. 
• Initial training to help you manage your business and maximize profitability. 
• From the mutualization of investments and therefore from lower operational costs. 
• From the already established brand awareness.

Disadvantages of the franchise

Keep in mind, however, that in return for these advantages, you will have to pay the franchisor a fee. The latter is quite substantial and can take the following forms: 

• the initial fee,
• monthly royalties,
• the percentage of the turnover,
• the margin on purchases made from the franchisor.

You are also required to comply with the franchise's operating manual and follow strict guidelines on how to operate. It depends on the franchise, but the rules may include inventory management, pricing, employee uniforms, customer service, sanitation, etc. 

If you had to remember one number, anOhio State University study found that the failure rate for restaurant franchises is 20% within 5 years of opening, compared to over 80% for a traditional solo restaurant.

It makes you think...

‍

The 7 steps to open a fast food franchise

Franchising has now no secrets for you and you are convinced that this model suits you. Where do you start?

1. Find THE Franchise

It may seem obvious, but your first task will be to decide on THE franchise you will open.

Start by thinking about the concept of your future restaurant:

• Are you more attracted to a vegetarian restaurant, a burger joint, or an establishment that focuses on world cuisine?
• Do you want your meals to be accessible to everyone or do you prefer to position yourself at the top end of the market?
• Will you emphasize the local origin of the products, the short circuits, the organic and/or the seasonality?

You'll soon realize that defining a concept in as much detail as possible will help you sort through the large number of existing franchises. 

Other factors will help guide your choice:

• The amount of the personal contribution, the entry fees and the total investment to compare it to your budget.
• If you are looking for an established brand or a new brand, the number of franchises should be taken into account. 
• Location.
• The duration of the franchise agreement.
• The various requirements of the franchisor, particularly with respect to advertising. 
• The estimated turnover after two years of activity can also be very useful.

You should now have a clearer idea of which fast food restaurant is right for you.

2. Evaluate the business plan

You've chosen your franchise and the franchisor has given you the green light. But you still have a lot of work to do! You now need to work on your business plan. It's important to get it right, because it'll help you lay a solid foundation for the smooth running of your restaurant.

Here are the elements to be specified: 

• Financial information: start-up costs, cash flow, break-even analysis. 
• A detailed description of the goods and services being marketed and the intended target audience, 
• The analysis of the market study carried out beforehand,
• Competitive analysis,
• The number of employees required, their functions and their remuneration,
• The structure of the business,
• The marketing mix.

Of course, you will have to do this while taking into account the requirements of the franchise.

3. The legal aspect

Legal, a little word that often creates panic on its own, but you will see that there is nothing very complicated.

Opening a franchise is the same as creating a new company, so the procedure is the same.

The legal and tax status of your franchise

Limited liability company (SARL), simplified joint stock company (SAS) ?

We let you make the decision with a chartered accountant. No one is in a better position than him to present you the advantages and disadvantages of each status and help you choose accordingly.

Permits and licenses required to operate your restaurant

Here are the 3 essential prerequisites to launch your business:

1. Find out about the declaration of existence from the DDPP (Direction Départementale de la Protection des Populations) or the DDCSPP (Direction Départementale de la Cohésion Sociale et de la Protection des Populations) of the prefecture of the place of establishment.
2. You must have completed a "food hygiene training for commercial food service establishments".
3. Finally, you must present a liquor license, if you intend to sell alcoholic beverages, as well as a business permit.

The signing of a franchise agreement

This agreement defines the obligations and rights of the franchisor and the franchisee. This contract binds you as an entrepreneur. The duration varies, but it can be renewed with the agreement of both parties.

4. The financing

One more step towards the realization of your project: financing.

To open your fast food franchise, you must bring a personal contribution. To join their network, franchisors generally require a contribution equivalent to 30% of the total investment.

If your own resources are not enough, you should know that there are grants and subsidies for starting a business:

• ACRE (assistance for the creation or takeover of a business),
• the NACRE (new support for the creation or takeover of a company),
• the honorary loan,
• BPIFrance solutions,
• microcredit,
• participatory financing,
• leasing,
• etc.

You must also pay an entry fee, the amount of which is specific to each franchise chain.

Here are some examples of the amounts to invest to join the most common franchise networks in France:

McDonald's

• Personal contribution: €300,000
• Entry fee: 45 000 €.
• Total investment: €850,000
• Operating fee : 10 % of the turnover before tax
• Advertising royalty: 5% of sales before tax

Burger King

• Personal contribution: €300,000
• Entry fee: €50,000
• Global investment: 800 000 €.
• Operating fee : 5 % of the turnover before tax
• Advertising royalty: 5% of sales before tax

Subway

• Personal contribution : 80 000 €.
• Entry fee: 10 000 €.
• Total investment: 330 000 €.
• Operating fee : 8 % of the turnover before tax
• Advertising royalty: 4.5% of sales before tax

If these amounts seem high, don't panic! Remember, we're talking about the most well-known franchises. Further down in this article, you'll find figures for other franchises, and some are considerably more affordable.

5. The room and the equipment

As soon as you get your funding, you will have to spend it.

To open a restaurant franchise, you'll inevitably need premises. Before you decide to buy, rent or build a building, take the time tostudy its location .

First of all, make sure that the traffic around the premises is smooth and that there is a parking space, otherwise potential customers will not even bother to move, let alone come back. 

Also, pay attention to thecompetitive environment of your restaurant. Don't set up your restaurant where there are already many fast food restaurants, because you will have a hard time gaining market share. 

You should also make sure that the location you choose meets the requirements of the franchisor. The franchisor may have a say in the location of the restaurant. 

Finally, know that your target audience (you know the one you defined in your business plan) can give you valuable clues as to where your business is located.

Here is a very concrete example: if your restaurant concept is aimed at a young working population, then look for a location near offices. Their way of eating (on the spot, to take away in click and collect, in delivery via online ordering) will help you to organize your restaurant and to determine the number of daily covers. 

Next, you will need to equip the kitchen and the different areas of your restaurant.

6. Human resources

In your business plan, you normally defined the number of employees needed to launch your restaurant. Now that the project is taking shape, you will need to define the position and responsibilities of each employee by specifying : 

• the job title, 
• the status of the position (supervisor, manager, etc.),
• its position in the organization chart,
• working conditions (location, hours, vacations, etc.), 
• missions and responsibilities,
• the technical and human skills required.

Then you can start recruiting!

LinkedIn and job boards can help you. For kitchen staff, don't hesitate to contact culinary schools, recruitment agencies specialized in the sector or professional training organizations. All this, in order to retain the profiles that correspond 100% to your requirements.

👉 9 tips for recruiting restaurant staff!

7. Boom: go for it!

You've followed us this far, now all you have to do is get started!

You will realize that this step is far from being the most complicated. In fact, the more serious and thorough the upstream preparation, the more the rest will be a piece of cake, or almost... You will also develop your expertise with the time spent in the field. Little by little, you will become familiar with team management, accounting, communication, stock management, procurement, etc. There is little room for routine in a restaurant manager's day, whether franchised or not.

You will obviously wear many hats, but for each of these roles, you will be well supported by the franchisor.

👉 Find out more in our webinar How to boost productivity in fast food?

Last but not least, don't neglect the digitalization of your restaurant!

It's no coincidence that McDonald's is a real success! Yes, their burgers are good, yes they communicate constantly, but they have also understood the link between digital and fast food. The equation is simple. The smoother the order delivery, the faster the customers are served and satisfied, and the more meals are sold. 

The result? A better profitability for your establishment.

Order taking(kiosk, online or click and collect), checkout solutions, order preparation in the kitchen- digital is with you every step of the way! You can also count on it to improve the management of your restaurant.

That's our job at Innovorder: we help restaurant owners with their digital transformation by offering them digital solutions tailored to their needs. And our customers are in a good position to tell you how much this impacts the productivity of their restaurant.

👉 Discover Nampla's testimony

‍

‍

4 successful fast food franchise concepts 

Theory is good, but what is more telling than concrete examples that work? Among the most famous success stories are Burger King, Amorino, La Mie Câline and Chamas Tacos.

1. Burger King 

What if you became a Burger King (or BK for those in the know) franchisee?

All the restaurants of the brand are based on the same concept which makes it the number 2 burger brand in France. Burger King certainly offers you a quick meal by eating a burger on the spot or to take away, but not only that... It is also a meat grilled on the flame and fresh ingredients presented in a menu satisfying all tastes and all budgets.

To join the Burger King network, you need to plan for a total investment of approximately €1 million, including €33,000 in entry fees and €300,000 in personal contribution.

This money is used to acquire a premises of at least 300 m² located on the outskirts of a city, in a commercial zone or on busy roads. You will then have to justify a first successful experience as a business manager. Your ability to manage teams, to make decisions and to manage the economy of a business will also be studied by the recruitment team. Finally, you will be required to complete 250 hours of training in Burger King methods. 

In return, you are accompanied by a franchise advisor who will support you in the daily management of your restaurant: profitability, team management, recruitment advice, sales growth, etc. The brand has big growth ambitions, so the opportunities are numerous and assure you of good profitability prospects.

2. Amorino

Amorino, a name that breathes Italy! And rightly so, since this brand offers ice creams made in the purest Italian tradition since 2002. With more than 200 points of sale in the world, the two Italian founders can be proud of their success! The brand is the number 1 Italian ice cream seller in the world. It also offers hot chocolates and gourmet coffees accompanied by panettone and other transalpine specialties for the coldest months of the year.

Would you like to embark on the gourmet Amorino adventure?

There are many opportunities, as the company wants to reach 400 stores by 2025. The personal contribution is 200 000€ for a total investment of 500 to 600 000€. The entry fee is 30 000€. By joining the network, you can count on Amorino's unfailing support for the choice of the location, the fitting out work, but also for the development of your turnover.

3. La Mie Câline

We no longer need to introduce La Mie Câline, a brand with a name that makes you salivate! This one is known for its offer of bread, pastries, pastries and catering. It is aimed at a very wide audience, from students to business executives in a hurry, as well as families. The brand, created by André Barreteau in 1985, has grown! It now has more than 240 stores, 95% of which are franchises. In order to increase its territorial coverage, the brand aims to reach 300 points of sale by 2025, so don't hesitate to send in your applications.

To apply for a job at La Mie Câline, you must have a personal contribution of 80 000€ for a total investment of 460 000€ (excluding leasehold rights). The entry fees amount to 30 000€. Profiles from the restaurant sector are appreciated, but you will also have a chance if you come from another professional background. The training is sufficiently complete and structured to allow you to acquire the skills and knowledge required to manage a La Mie Câline store. The only requirements are of course to appreciate the company's philosophy and to have both the qualities of a shopkeeper and a business manager.

4. Chamas Tacos

Are you more into cheese sauce than Big Mac sauce? More tacos than hamburgers? In that case, Chamas Tacos should get your attention. This chain was born in 2014 and, as its name suggests, offers tacos, but custom tacos.

This brand offers franchisees the possibility to choose between 2 concepts, depending on their aspirations and budget: the classic model and the take away model. The first one requires a global investment of 200 or 250 000€ and the second one of 100 000€. The personal contribution is respectively 70 000€ and 35 000€. The entry fee remains unchanged at 35 000€.

To find out the amount of royalties, we invite you to consult the page of each of its franchises. You will also have access to information on the turnover, the average surface as well as the potential profitability of the point of sale.

What fast food chain would you like to join as a franchisee?

-

You want to start a franchise? Let a digital expert accompany you to boost your sales from the moment you open!