How to Start a Fast Food Franchise?

Here's how you can start a fast food franchise or invest in an established franchise in a sector worth over £15bn to the UK economy.

Fast Food Franchises are worth more than £15bn to the UK economy.

How to Start a Fast Food Franchise?

Franchising carries some of the biggest business brand names on the planet. A bulk of these trade in the food and beverage sector. From the likes of McDonald’s and KFC to Amigos Burger & Shakes and Black Rooster, these franchises all contribute to the £15bn worth of the fast food sector in the UK. Entrepreneurs looking to get involved in the lucrative sector won’t have to look much further, here is how to start a fast food franchise in the UK.

Although this article mainly focuses on fast food franchises, the principals of investing, or the setup of a franchise network can pretty much be applied to any restaurant or premises based business.

Firstly, starting a fast food franchise and investing in a fast food franchise are two completely separate things. This article will be broken into two separate parts; franchising your fast food business, and investing in a fast food franchise.

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What is a Fast Food Franchise?

Franchising is a business expansion concept where a brand owner grants usage of the brand and business model to a third party. The owner of the brand is known as the franchisor, and the investing party is known as the franchisee. A franchise network can have many franchisees, and a good example of this is McDonalds. There are many fast food franchises that can be run in the UK.

In a fast food franchise, the franchisee is responsible for the day-to-day operations of the restaurant, including hiring staff, managing operations, and ensuring compliance with the franchisor’s standards. The franchisor provides support, training, and usually the equipment and supplies to get started. Operation of the business under the franchisor’s brand is granted after the franchisee pays the franchise fee.

Becoming a franchisee with a leading fast food brand means you’ll be in business for yourself but not by yourself. With access to the franchisor’s partners and suppliers plus a wealth of training and support, premises fit out support and marketing, franchising is a great way to become a business owner.

How to Franchise a Fast Food Business?

Franchising your fast food business can open many doors. The success of big name fast food brands like KFC and Subway is all thanks to franchising. From the opening of the very first shops to exploding marketing and brand recognition. More and more independent fast food businesses are becoming increasingly known franchises.

Why You Should Consider Franchising Your Fast Food Business

Franchising encompasses many benefits for the business owner. While the benefits for a franchisee investing are fairly obvious (training and support, full business package), the benefits for the franchisor aren’t immediately clear. Despite the benefits of franchising a fast food business not being immediately transparent, many advantages can influence positive growth and success. Let’s take a look at just some of the advantages.

Rapid Business Expansion

Because the cost of opening a unit falls upon the franchisee, franchisors can open up multiple units across multiple areas at little cost. By franchising, a fast food restaurant can extend its presence nationally or globally, leveraging the capital and local market knowledge of its franchisees. This model accelerates the pace of expansion while mitigating the risks associated with new market entry. Franchisees will have a better understanding of local demographic and demand, who are in a better position to identify the best possible location for the business.

Motivated Management of Units

The investor (the franchisee) will have shown determination and ambition for success, making them a perfect leadership decision for driving a brand forward and opening new units. Where managerial employed staff can change several times a year, a franchisee is a long term commitment, thanks to the fact that they own the business in that area. The franchisor can have confidence that expansion plans are going for the long term.

Building a Recognised Brand

The biggest benefit of franchising a fast food business is the growth of the recognition of the brand. As more units establish, familiarity grows and the reputation is shared across all franchisees. Building a positive image, all franchisees see a growth in sales as the brand name is synonymous with great food.

Understand Franchise Feasibility Studies

A franchise feasibility study is a series of benchmarks which a business is checked against to determine its viability for franchising. Realistically, any business model which serves either businesses or consumers can be franchised, from dog walking to online e-commerce ventures. Taking into consideration aspects such as:

  • Market audience – there are some really good, exciting fast food franchises which have a unique twist. A feasibility study will analyse the demand for the products and audience the food will cater for.
  • Legal considerations – trademarks and legal issues can present challenges when franchising a business. You will need to work with a franchise consultant and a legal advisor to look into any challenges you might face.
  • Operational setup – can your day to day routine be easily replicated across franchisees? Your food business setup needs to be simple and scalable. This will be tested with a pilot franchise.

Working with a Franchise Consultant

A franchise consultant will help you drive the plans to franchise your business forward. They will help you prepare the necessary franchising documents to ensure that the franchise setup runs smoothly. Franchising a business is not cheap, so you need to be prepared to spend a five figure sum to make sure that you get everything done properly. This includes creating an operations manual – a comprehensive document not just outlining, but detailing, the full running of the business and the brand as well. You’ll also work with the consultant to map your territories, prepare a franchise agreement (and a deposit agreement), and a franchise prospectus. The franchise prospectus is what you’ll send out to prospective enquiries. In the early days, you may spend up to £10,000 on recruiting your first franchisee alone. It can be challenging to recruit the first franchisee because the brand is still fairly new. As time goes on and you build up a stronger franchise network, you’ll find franchisee conversion rates can be as low as one in fifty leads.

You’ll want to work with a franchise consultant for as long as possible, running franchise discovery days and interviewing potential franchisees, right up to opening the fast food outlet.

With a franchise consultant, you will work with them to:

  • Prepare the business for franchising
  • Create all necessary franchising documentation following a franchise feasibility study of your fast food business or restaurant.
  • Establish partners, suppliers of food, contractors and trusted tradesmen to carry out store fitting in line with the spec of your brand fitout
  • Find and profile suitable franchisees
  • Find suitable premises for the franchisee if they don’t already have a premises

Looking to franchise your business? The Franchise Consultant can help you with the necessary steps to getting your franchise off the ground.

How to Buy a Fast Food Franchise?

Becoming a franchisee is a great way to get into business ownership, and owning a franchise territory of a recognised brand is a fantastic asset to have. Buying a fast food franchise (also called investing) gives you everything you need to get into the F&B sector. What’s more, support including staff recruitment and training, ongoing R&D is all included. If you’re looking to buy a fast food franchise, the first step is choosing one that aligns with your visions and passions.

Choosing The Right Franchise

Access to learning more about franchise opportunities has never been wider. With a wide range of franchise directories online, you can explore franchise opportunities all in one place. There are also a wide range of franchise opportunities who are British Franchise Association members including:

  • Dominos Pizza Franchise
  • Costa Coffee Franchise
  • Burger King Franchise UK

If you’re looking to learn more about the opportunities available, take a look around Franchise Planet or consider attending a franchise exhibition. The first step to becoming a franchisee is exploring the sector. Make a list of franchise brands that interest you, request a franchise prospectus, compare them, and make a shortlist. Once you’ve made a shortlist of fast food franchises that align with your investment level and ambitions, the next step is to meet the franchisor. The franchisor won’t try to “sell” you a franchise. Franchise networks depend on all franchisees sharing the same vision and goals, so you won’t be forced into making any decisions you don’t want to make! Franchising is a big step forward for all parties involved, and for many franchisees it’s a decision they haven’t looked back from!

How Much Do Fast Food Franchises Cost?

Fast food franchises will cost differently depending on the size of your premises, ongoing premises access/rental costs, utility prices, plus franchise setup costs.

The franchise investment of most fast food franchises will usually be less than £50,000. For example a Black Rooster franchise costs £15,000 while an Amigos Burger and Shakes franchise fee is £25,000. Higher end chains like McDonalds will usually expect a minimum of £100,000 personal investment. Typically this franchise investment covers access to the brand, suppliers and the actual business launch / startup requirements. All fast food franchises will need you to have at least £100K capital as well, for the cost of shop fitting and ongoing costs until breakeven.

A fast food franchise having its shop fitted
How much a fast food franchise costs will depend on the price of the franchise fee investment (access to the brand and business model), plus capital for shop fitting which will vary according to the size of your premises.

Therefore to invest in a fast food franchise in the UK, you will need at least £150K investment (including franchise fee), which may be more depending on the size of your premises.

Many banks actively work within franchising, such as Barclays, NatWest and HSBC, and there are many businesses involved to the extent that they can lend you a generous figure to help you get started.

If you don’t already own a suitable premises, a franchise consultant and the franchisor can help you find one. You will need to pay rent and access to utilities ongoing, which will be included in the profits and losses predications you’ll receive from the franchisor when you make an enquiry.

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How Much Do Fast Food Franchisees Earn?

The earning potential of a fast food franchise owner depends on many factors. Your franchisor will provide you with an outline of the profits and losses predictions which are usually based on the performance of existing franchisees. Usually this chart will include details of where the franchise actually earns money, how much it should turnover and where the losses happen. Staff, equipment, supplies and marketing are all taken into consideration. Predictions, these figures should be met or exceeded with dedication, hard work, and of course the location/size and footfall of the premises. Factors like number of staff, opening hours and the pricing of products influence how much fast food franchisees earn. Although franchisors will encourage a default pricing structure, usually you – the franchisee – have control over how your products are priced.

McDonalds franchises often cost in excess of £750,000 to get up and running. Therefore in order to break even and make a decent turnover, the franchise restaurant will need to be well positioned in order to achieve a return on investment within just a few years. Ongoing royalty fees for the big M and other high end franchise chains for sale will sometimes be higher too so you’ll need a greater number of customers to maintain steady profits.

New fast food franchises will certainly not cost as much as bigger name brands do. The franchise investment for many fast food franchises with less than 20 units can be as low as £35,000.

Fast food franchisees will often turn over six to seven figures a year. Usually the earnings are lower in the first year but by year three, profit is noticeably higher. You will see this on the profits and losses predicitions.

Contact a franchise through this website to receive their franchise prospectus, franchise territory availability map and profits and losses predicitions.

Interested in Becoming a Fast Food Franchise Owner?

Request information about any of the fast food franchise opportunities on this website to receive an initial email and information pack from the franchisor. The prospectus PDF will contain a lot more information about the brand, including setup costs and earning potential.

Can you see yourself running a fast food franchise this time next year? Be a part of the booming fast food sector, get involved with franchising.

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