How to Buy a Restaurant Franchise: The Beginners Guide to Ownership

Want to know how to buy a restaurant franchise? Read to understand the overall process of buying a franchise

Want to know how to buy a restaurant franchise? Understanding the overall process of buying a franchise can help you get a foothold in the foodservice industry.

If you imagine a future owning your own restaurant, franchising allows you to achieve your goals. While opening an independent restaurant is possible, franchising provides a way for you to pursue your dreams with support and training. The franchise model comes with a built-in customer base and tested menu, improving the probability of success. Operating a restaurant with a proven system and a familiar brand can give you a leg up on the competition and minimize risk. Receiving training, support, and marketing guidance streamlines the startup process.

High job numbers and an increase in consumer spending is making restaurant franchises a prime market for growth this year. Full-service restaurants are on track to generate $76.4 billion in 2022, and the economic output at fast-food eateries is projected to jump 5.8% to $276.2 billion, according to a forecast from the International Franchise Association.

Guide to Opening a Restaurant Franchise.

Investing in a restaurant franchise requires careful planning, research, and guidance. There are more than 337 full-service restaurant chains in the U.S. and even more quick-service and fast-casual choices. Sorting through the mountain of franchise opportunities takes time and can be challenging. Below, we put together a game plan to make it simpler to learn how to buy a restaurant franchise and get started turning your dream into a reality.

Understand your career goals.

The first step to investing in a restaurant franchise is to flesh out your career goals. Restaurant owners are hard-working leaders with a passion for service. Understanding your career goals will lay the groundwork for the type of restaurant franchise you decide to pursue. Start by asking yourself the following questions.

  1. Where do I want my restaurant to be located?
  2. How many employees do I want to manage?
  3. How much money do I need to make?
  4. How much time do I want to spend on the job?
  5. What type of food do I want to serve?

Your financial and lifestyle aspirations will enable you to pinpoint the type of restaurant you want to pursue. Restaurant franchises have a wide range of price points and footprints. Location availability plays a big role in buying a restaurant franchise. Once you have a solid grasp of your career goals, choosing the design, menu, daypart, and average ticket cost becomes easier to determine.

Analyze the numbers.

Now that you have a vision of your ideal restaurant franchise, it’s time to crunch the numbers to see if investing in a restaurant is the right path for you. Every restaurant franchisor is required to file a Franchise Disclosure Document (FDD). The FDD provides an accurate projection of startup costs. It also outlines the partnership you will have with the franchisor and gives you perspective on the company’s past financial performance.

Weigh your franchise choices.

When you compile a few franchise contenders, talk to existing franchise owners in the systems you’re considering. Learn the challenges they encountered and how they managed to persevere. Validating the experience of existing franchisees allows you to get a feel for the brand and will influence your decision.

Initial networking is an asset even after your grand opening. Having a peer network to offer support and best practices makes it easier to avoid unnecessary hassles once your dining room is open.

Determine funding strategy.

One of the benefits of the franchise model is the lack of surprises. Franchisors provide a reliable breakdown of your initial investment in the FDD, which can make obtaining financing less cumbersome. The franchisor can provide support as you explore the wide variety of available financing options. Here are some of the common methods restaurant franchisees employ to open for business.

  • Rely on retirement. Fund your venture by relying on savings, retirement funds, or turning to family and friends for assistance. Rollovers for Business Startups, or ROBS, allow you to finance your new venture using your 401k savings with no penalty.

  • SBA loans. The U.S. Small Business Administration offers a variety of loans to aid fledgling local businesses. The loans come from private lenders but are partially backed by the SBA.

  • Commercial loans. Depending on your credit history, a commercial loan may be the fastest way to obtain financing. Term loans are paid back by making a monthly payment with interest tacked on.

  • Franchisor partnerships. Many franchisors, like Scramblers, have partnerships with lenders to make it easier for entrepreneurs to secure financing. Scramblers has relationships with third-party sources that offer financing to qualified candidates to cover equipment, inventory, accounts receivable, and payroll.

Attend Discovery Day.

Before you sign a franchise agreement, you will have a chance to travel to the franchisor’s corporate headquarters as part of the discovery process. During Discovery Day, you’ll meet the leadership team and visit face-to-face with various department heads and franchisees. Partnering with a business that shares your values and work ethic plays a role in building a valuable relationship. Part of the trip includes an inside tour of one of the restaurants to see operations first-hand and sample some tasty fare.

Sign a franchise agreement.

After you finalize your territory and establish your growth plan, it’s time to sign the franchise agreement.

Now the fun begins! After you sign a franchise agreement, the franchisor will provide support as you scope out the best location, hire employees, and navigate food service health codes. One of the perks of partnering with a franchise is the training they require to get your establishment off the ground. Franchisors also offer ongoing marketing guidance and product development to grow your loyal customer base.

Crack the Perfect Egg with Scramblers.

Scramblers is a family-focused business specializing in breakfast and brunch. We currently have 26 locations and more than 30 years of experience. Scramblers serves fresh, homemade breakfast fare like omelets, waffles, and scrambled eggs, as well as seasonal specials, such as pumpkin stuffed French toast and a gameday skillet. Soups, salads, and sandwiches are also on the menu.

Scramblers stays at the forefront of the breakfast daypart by focusing on innovation. We recently launched a fast-casual concept designed to appeal to Generation Z called City Egg. Our franchise owners also have the option of renting out the restaurant in the evening for special occasions, a perfect way to add additional revenue streams.

Cooking the perfect omelet and getting the right crisp on the bacon requires guidance. Investing in a full-service Scramblers franchise requires $450,000 to $850,000. As part of your investment, you gain access to the company’s robust training program and support system to ensure your scrambled eggs are fluffy and your hollandaise is creamy. All of our franchise owners participate in a two-week training program and opening guidance. Our support doesn’t end after your kitchen starts to service customers. Members of the Scramblers franchise team visit periodically and are just a phone call away.

Learn More about the Scramblers Eggs-perience.

Now that you understand how to buy a restaurant franchise, it’s time to hatch a plan for your future. Scramblers is excited to grow our footprint nationwide and is looking for partners to help us expand. Get started today!

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