Purchasing a franchise of any kind has its own advantages and disadvantages. In general, a food franchise is a sound investment in the long run. However, before you make an investment, it’s wise to dig deeper and gain more insights. While each food franchise has its own merits and risks, in this article we explore both sides of owning a food franchise.

Food franchise - Photo by Farhad Ibrahimzade on Unsplash

Most franchise investments offer the opportunity of an already well-established brand. This is especially true of food franchises such as the Jollibee Food Corporation. The public already knows whether they want to eat the food from that particular franchise. People on their lunch break or kids asking their parents for a treat may wish for a franchise meal. The only factor an investor needs to consider is the restaurant location benefit.

Food franchise financing – advantageFood franchise financing is fairly straightforward. Banks usually know the details and have enough insights into the process of financing. Since banks know exactly what to look for, they feel comfortable approving funding. However, financing is not easy in today’s economy, hence look for stable financing options, and be risk averse.

Revenue generation from food establishments is fairly regular and high. As long as the brand name attracts a steady stream of customers, earnings from food establishments will remain stable and in the high earning range.

Real estate assistance in food franchise ownership – advantagePicking a food franchise with a great real estate expert is key to a sound investment with good ROI. Once the franchise agreement is signed, real estate experts can connect with commercial real estate companies to get the best locations for the restaurants. This provides a huge advantage to the investors.

Food establishments require a large number of employees to operate. However, most of these employees tend to receive low pay for demanding tasks. This usually leads to a high turnover as employees switch to other jobs. Attracting good employees and retaining them is always a challenge in the food franchise business. Training new employees to meet the standards of the franchise takes time and effort. This is a generic risk in the food business.

There is a definitive fine line between goods cost, labour cost and making profits in the food industry. Food franchises must make way for food spoilage, unforeseen problems and theft. Additional costs incurred include purchase costs for approved vendor goods. This can impact profitability.

Buying a food franchise is going to be a substantial investment. The necessary equipment would include food, ovens, food disposal machines, air conditioning, furniture and more. Unlike home-based businesses, restaurants require a property and include maintenance costs. The other costs would include royalty payments and marketing costs. In addition to the initial investment cost, there will be substantial recurring costs.

Managing a food franchise requires high energy and long hoursEven with the additional costs, a well-run food franchise attached to a great brand can make a considerable profit. However, this requires a lot of input in terms of energy and time. A food franchise owner would need to spend long hours, ensuring that all goes smoothly. During peak times, a restaurant would need extra labour and effort. A restaurant is going to be a high-energy environment with a lot of employees with different temperaments.

The bottom line though is that owning a few units of a highly functioning food franchise can be rather lucrative.