Restaurants that are franchises have a lot of perks. You can start your restaurant franchise with a name that is well-known, trusted and even generates sales with minimal advertising. However, there are perks and drawbacks to owning and running one of these businesses that you must consider.

How To Own a Restaurant Franchise

Franchisees, or owners that are allowed to operate one of these restaurants, will need to have a lot of upfront capital to own a franchise. For example, if you want to own a franchise of your own, the following is the average cost for owning one of the following:

  • $1.4 million to $2.3 million to open a Denny’s
  • $1 million to $2.2 million to open a McDonald’s
  • $530,000 to $3 million to open a Taco Bell

You'll need to have the initial investment to open the business, but the process is more intense than that. The franchise may require you to:

  • Complete an application
  • Share your financials
  • Map out where you’ll place your store
  • Supply certain legal documents
  • Meet with existing franchises
  • Meet with the owner or manager

If you are approved to open a franchise restaurant, then you need to consider marketing and other aspects of operation because they’re very different from when owning a non-franchise restaurant.

restaurant franchise opportunity

How Does Franchise Marketing Work?

Franchise marketing is different. You have your own individual stores that are all based on a general brand, such as McDonald’s. When marketing, there are two levels that you need to consider:

  1. Franchisor marketing that includes promotions on social media, television, and more. These campaigns are on a national or regional level.
  2. Franchisee marketing, which is what you do on the local level to market your business.  You may operate your own social media channels, direct mail, and other forms of advertising.

You may also be competing against other franchises in your area, and this increases your general competition, too.

However, as a franchisee, you also have a lot of help from the franchise. The franchise is likely to offer marketing and branding support. You will need to follow certain rules and requirements to stay within the marketing guidelines of the franchise.

If the franchise does promote on the national or regional level, they will demand a certain percentage of your sales. Most franchises will charge 2% - 5% for their marketing, which you must pay to continue operating under the company’s name.

Subway charges their franchisees 4.5% of all sales for marketing. On top of this percentage, you also need to pay royalties of 8% of your monthly revenue.

If you make $100,000 per month as a Subway owner, you’ll need to pay $12,500 in fees to operate based on the figures above.

Can You Create Your Own Marketing Plan?

Yes, you can, but there may be restrictions on the way that you market. Brand consistency is something that franchises promote, and you will need to maintain this consistency in all of your marketing.

For example, you cannot change your logo in your marketing and deviate from the main company’s branding.

However, you may be part of a franchise that:

  • Markets nationally or regionally
  • Requires you to do your own marketing

In both cases, you’re very likely able to create your own local marketing plan. You can purchase ads online, send out fliers and market your franchise any way that you want. However, there are always going to be some exceptions that exist based on the franchise agreement.

You'll sign a lot of documents when applying for a franchise, and this will likely include an agreement to not market your business in certain ways. For example, you may not be allowed to send out mail inserts in an area where other franchise owners operate.

You can also, in most cases:

  • Join in on local deals and specials
  • Opt out of participating in certain deals and specials

With that said, it’s always a good option for you to have your own marketing plan to promote your company locally.

How To Start a Restaurant Franchise

what restaurants are franchises

What restaurants are franchises? A lot – even TGI Friday’s. Some operations are obvious franchises, such as Burger King and Starbucks, while others are much smaller and lesser known.

You can open a franchise using the information above, but you can also turn your restaurant into a franchise. The process of turning your existing business into a franchise will require you to:

  • Create a franchise disclosure
  • Create an operational manual
  • Create a franchise agreement
  • Sell the restaurant concept

However, you’ll need to work with a lawyer who has experience with franchising. You'll also need to have strong and consistent sales and provide extensive marketing and branding help to franchisees. 

After all, a person who wants to become a franchisee wants to benefit from your existing branding and success.

If you haven't found success and don’t have a proven track record, why would someone choose to franchise with you? However, if you want to generate more revenue through royalties, you can do so by turning your restaurant into a franchise.

Best Food Franchises to Open

New restaurant franchises are popping up across the world, but the best ones to open include:

  • Checkers & Rally’s
  • East Coast Wings + Grill
  • Clean Juice
  • Culver’s
  • McDonald’s
  • Taco Bell
  • Chick-fil-A
  • Eggs Up Grill
  • Marco’s Pizza
  • TGI Fridays
  • Many others

Even if one of these restaurants generates millions in sales in your area, there may not be opportunities to open up another in your area. Strict rules are often in place by franchisors, and demand in your area may not exist.

It's important to do your due diligence to know what franchise to open in your area, but when you apply to open a store, there will be an in-depth analysis done before approval.

A restaurant franchise opportunity is always something to consider. You benefit from a trusted name and national advertising campaigns, plus you have a winning playbook for success to follow. However, you do have to pay more fees when owning a restaurant franchise and lose much of the control you would have over the success and failure of the business.