Like say I wanted to open up a Pizza Hut, or a mcDonalds or something like that. Has anyone ever looked into it to see whats needed? I would assume since most franchises are corporate, you would have to get permission from them to start the business. Then you would need some serious up front capital to get it going, but does the corporate office help out with anything? Like if I opened a Pizza Hut, would the corporate office supply all the stuff needed? I would just have to pay for it obviously, right?

What benefits would there be to opening up a franchise like say Pizza Hut as an example, versus just opening up something small like Joes Pizza Shack? Does the franchise give you marketing dollars or something towards getting people in the door?

 

I have no experience, just making assumptions.

You buy everything from the company, since all cups, paper products, ingredients have to be the same from one to the next. You probably pay $xxx,xxx to open one up and then pay $xxx or xx% depending on sales.

What information have you found on Google already?

 

Subway is one of the most successful franchises. I've heard of people (friends of friends) making tons of money.

From Subway's website:
<div class='quotetop'>QUOTE </div><div class='quotemain'>We offer location flexibility and an easy-to-run operation built on simplicity and efficiency, so our start-up costs are lower than most restaurants. The initial franchise fee is $15,000, and total investment can be as low as $78,600. Individual costs vary, so contact us for more details. See the drop down menu below for estimates of your required investment:</div>
http://www.subway.com/subwayroot/Developme...ming/index.aspx

 

http://franchises.about.com/od/mostpopular...onaldscosts.htm

<div class='quotetop'>QUOTE </div><div class='quotemain'>Financial Requirements and Start-Up Costs to Open a McDonald's

An initial down payment is required when you purchase a new restaurant (40% of the total cost) or an existing restaurant (25% of the total cost). The down payment must come from non-borrowed personal resources, which include cash on hand; securities, bonds, and debentures; vested profit sharing (net of taxes); and business or real estate equity, exclusive of your personal residence.
Since the total cost varies from restaurant to restaurant, the minimum amount for a down payment will vary. Generally, you need a minimum of $300,000 of non-borrowed personal resources to be considered to open a McDonald's franchise. Individuals with additional funds may be better prepared for additional or multi-restaurant opportunities which McDOnald's encourages.</div>

<div class='quotetop'>QUOTE </div><div class='quotemain'>During the term of the franchise, you pay McDonald’s the following fees:
Service fee- A monthly fee based upon the restaurant’s sales performance (currently a service fee of 4.0% of monthly sales).
Rent - A monthly base rent or percentage rent that is a percentage of monthly sales. McDonald's usually owns the property and also acts as the landlord.</div>

 

Way cheaper to just open up your own small place. The only advantage of the franchises is that you ave the name of the establishment behind you and its something that people know. Plus with franchises you have to stick with what corporate tells you to do and what to offer on the menus and what price to charge for it. You're still working for someone else even though its your own place that you opened up.

Much better to just do your own thing and open your own place where you have freedom to offer what you want on menus, make your own pricing, and run things the way you want.

 

It depends on the area you live in. If the town is receptive to local restaurants and you can get established, it should boom.

With a franchise, you don't have to do the legwork - no advertising, nothing to draw people to your restaurant. People know Subway, McDonald's, Burger King, Logan's, etc... They'll come because they know what it is and know what to expect. Keep it clean, presentable, good service, and good/clean/efficient kitchen and it'll be successful.

Opening your own restaurant, you have to get the word out, you have to do advertising to get people in there to try something different; you have to battle with distributors to get food pricing (as it changes weekly).

Consider this: You have $xxx,xxx to open a restaurant. You design the kitchen and dining area as big as you can afford. Let's assume the place has awesome food and is a big draw for customers - you pack the house every night. If you didn't design your kitchen to be big enough, people will start hating the place because it takes an hour to get their food, or you might not have enough room to sit all the guests you want, so you've limited your ability to maximize sales/profit. Because your budget may be limited on the front end, you can run into problems you didn't anticipate.

A local marina has great food and a great atmosphere (dinner on the lake), but their kitchen is too small to accomodate the surge of customers. I've waited for an hour to get catfish and fries, and with a table of 6, half were done eating by the time the rest got their food. Their kitchen is just too small to handle it.

Another local BBQ place has GREAT food, but probably can't fit more than 60 people in their dining area. When they have live music playing, people stay for hours and there's no room for new customers to come in and order. People finish their dinner and stay there listening to music, not buying more food and not providing any further revenue to the owner.

There are definitely SEVERAL pros and cons to consider on both sides.

 

Some franchises have crazy rules as well. For example, Burger King franchisee's recently sued Burger King because they lose money on every $1 double cheeseburger they sell. They're required by their franchise agreement to honor national sales. You can't buy a McDonald's franchise unless you've been a manager at one for a certain amount of time. It's not just about the money.

 

^Yeah, a lot of them require you work in their restaurant before you can own one. Subway is not one of them though, and as quoted above, the startup fees are low. In most cases, corporate will lend you quite a bit of the start up and you pay them back over x number of years, then just pay them royalties for the rest of the life of the franchise.

 

<div class='quotetop'>QUOTE (majik @ Aug 12 2010, 10:31 AM) <{POST_SNAPBACK}></div><div class='quotemain'>People know Subway, McDonald's, Burger King, Logan's, etc...</div>

what the heck is logans