Things to know before you invest in any Food Franchise
Posted On April 25, 2020
Being in the bakery business since more than 5 years, we also have experienced ups and downs in the buisness. Nowadays its a fashion to open up a Food Franchise and call yourself a BusinessMan. I want to share you some pros & cons and few secrets you definately need to know in this business.
A short story to share before I start off- A brand named Indian Pizza Factory (name changed) had duped their franchise investors in a very smart and legal way. In the beggining, it was just the owners brand and slowly they started publicising it at a trade fair and other events. The brand owner hyped his brand like a monopoly and it did work out. He shamelessly charged 10 lakhs for just a recipe of pizza to which all the 8 franchise takers agreed plus the furniture and other expenses which went to 18 lakhs. So the total cost they paid is around 28 lakhs for a single franchise outlet. The situation became worse when all the 8 oulets shut in a span of 1.5 years bearing a huge loss. And finally the happy brand owner made 80 lakhs filling in his pocket just in the name of selling a RECIPE.
Will be sharing few points you need to know before you invest in a Food Franchise-
1. Never ever in your life pay for any recipe. You may easily get it on Youtube, google or the Chef whom u’ve hired. Just back out if a brand tells you that its compulsory.
2. Either you pay a small deposit amount which is refundable and furniture of your own expenses OR you pay a sum amount of around 15-25 lakhs with a full set up of brand including the furniture. Cross check the details with the other outlets too of the same brand.
3. Make sure there are few outside items allowed to sell in a food franchise just to keep your expenses on a lighter side. As you also have to pay the rent, your staff, electricity, phone and other daily expenses.
4. Keep a track on the Variation your brand is giving. If they are not introducing any new dish/items which are unique according to the market the brand value may come down and it affects the sales. Make sure NEW and VARIATION are the KINGS in this market. If your brand fails on this, ultimately you fail.
5. As you have paid for the franchise make sure few of your pointsregarding sales and marketing of your outlet are heard and few measures are taken on it. If they ignore than you may have to find a replacement or your outlet may be shut.