Opening a fast-food franchise Essay Example for Free

Opening a fast-food franchise Essay Opening a fast-food franchise can be a very rewarding venture. Consumers ate as much as US$110 billion worth of fast-food in the United States in year 2000 alone, a dramatic increase from only US$6 billion in 1970. According to The National Restaurant Association, this trend continues to be observed as fast-food sales grow at a rate of 5% per annum to an estimated US$163 billion by the end of 2007 (Maxwell, 2003). This gives us the idea that a fast-food franchise is potentially a very profitable business option. However despite this implication, an average of three out of twenty-five franchises of major fast-food corporations close down at the end of every fiscal year (Maxwell, 2003), which tells us that merely opening a fast-food franchise does not guarantee success in the business. Therefore there is a need to follow certain guidelines in order to increases the chances of succeeding in the fast-food business venture. The first step is selecting an appropriate fast-food site. This could be a piece of property that you own or intend to lease. It is of prime importance that you first evaluate whether or not your intended site is fit for a fast-food franchise. Some franchisors require you to follow specific guidelines in selecting a site while others may even require you to merely choose from a list of sites that they offer. Sound evaluation of a prospective site involves a scrutiny of 1. ) sanitation, 2. ) consumer base, and 3. ) competition (Hogan, 1997). A fast-food site must be in an area that is relatively sanitized. You should never choose a site that is next to a junkyard or other similar structures. The best sites are located in places that have obvious potential consumer bases such as near a school where the school’s students and faculty members might comprise a commanding consumer base. Unfortunately, there are usually other fast-food outlets already installed in the best of fast-food site areas, which makes it important for you to first analyze the level of competition in the immediate area and whether you would be able to stand up to it. The second step is to select an appropriate franchisor (Hogan, 1997). The fast-food that you will choose should be in demand to your prospective consumer base. You can conduct a survey on the food preferences of people in your prospective site in order to have a better idea of which franchisor to select. It is also important to select a franchisor that has a well popularized trademark and a proven formula for good business. This is the main advantage to buying a franchise as opposed to starting a new fast food joint from scratch. Aspects of a fast-food franchisor such as advertising, good will, and favorable sanitation reports all trickle down to individual franchises. Furthermore, a well run franchise should be able to assist a franchisee on everything, from site selection and even lease negotiation to staff training, ingredients advisory and operations monitoring. The last step is to make the proper arrangements with your selected franchisor (Hogan, 1997). This involves settling a number of fees including those for initial franchise, royalties, and other miscellaneous fees for advertising and promotions. This step also includes hiring and training required staff and setting up the selected site. With all those taken cared of, what remains to be done is to procure stock for the food to be served and then you are good to go. Franchising is a potentially profitable business option. Anyone who is thinking about making such a venture should first look for an appropriate site and select a reliable franchisor before going into the detail of making final arrangements of setting up a franchise.