In an extremely competitive, but often highly profitable industry, opening a restaurant franchise offers future eatery owners better odds at becoming more successful with a pre-established brand. As with starting or opening any type of new business,
there’s necessary research involved, including several facts and stats that should be carefully weighed before investing.
There are a plethora of pros and cons to examine before choosing a franchise over an original restaurant concept, and vice versa. There are piles of make-or-break numbers in need of crunching prior to purchase. Here’s a quick breakdown of some of the crucial things to consider during the all-important, pre-purchase process.
Past the Price Point
Most franchises require purchasers that have a certain amount of in-cash reserves along with a minimum net worth. Smaller franchises will require less, but these amounts are still substantial. For example, Wendy’s needs $500,000 in liquid assets and $1 million net worth. Meanwhile, more sought-after, higher-end establishments like
the Twin Peaks’ franchises require $1.75 million in liquid capital and a minimum net worth of $5 million.
With bigger investments, often franchise owners will reap better results with a higher ROI. In the case of Twin Peaks, they recently reported 2018 was one of their most successful with YOY (year-over-year) sales, increased traffic overall and major improvements in guest experiences. By the numbers, this upscale sports lodge revealed a 6.7% increase in their YOY sales and a 3.25% rise in traffic.
More Intelligent Locations
Inside most franchise agreements, purchasers aren’t able to simply pick a spot where they want the new restaurant to appear and it will be approved. This is actually great news for investors because in many cases franchises have already done the homework about the real estate and market characteristics in the immediate area.
Think of it this way, the majority of new franchise locations are conversions of former dining locations keeping construction costs down. Other important location-based strategies pertinent to the approval process include:
• A minimum daily traffic count of tens of thousands of cars per day with direct access to the restaurant
- Areas with strong employment presence given a heavy daytime work population
- Standout perks like outdoor patio space, buildings with larger square footage,
and plenty of parking
- Leading high-population areas with mid-scale and preferably higher-end hotels and apartment complexes nearby
It’s simple math when you consider it’s often much easier and faster to sell ten items for $10 rather than 100 things for $1 a pop to reach the same goal. With an already larger population in place with more money to spend, odds sway in favor of reaching higher profit margins.
Openings and Experience
Another requirement for many franchisees is they already have business management experience and preferably a restaurant background. Depending upon the particular franchise, the type and length of these experiences may vary. Opening multiple locations in a specific time frame is also a common requirement.
In the case of Pizza Hut and Taco Bell, these franchises both require a minimum of three new restaurants within three years and Dunkin’ Donuts wants a minimum of five new locations after opening an eatery. Some requirements may offer a bit more wiggle room, with Twin Peaks asking for between three and five new establishments in some of their franchise agreements.
Confidence and Trust
Remember, this investment is a two-way street since the franchise is counting on the investor’s success to continue with their own, and vice versa. Be sure the corporation you choose to partner with is there for you in every way. If you have any questions about becoming a franchisee, please reach out and call the Twin Peaks franchise office today at (972) 941-3160.
Whether you’re choosing us or one of our competitors, we’re so confident in your choice we’ll be happy to educate you on the process. We’ll show you how the path to Twin Peaks is the best option for your hard-earned investment dollars. We’re truly here for you and are behind your investment 100%, because we believe in you as much as we trust in our brand.