Restaurant Franchise Opportunities Around the World

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by Aaron Allen
Restaurant Consultant, Speaker and Industry Analyst
Aaron Allen and associates

Franchising has allowed restaurant chains to grow exponentially around the world. And there is still plenty of room to grow even more. In mature markets like the United States, chains account for nearly 60% of foodservice sales – for every dollar you spend in restaurants, 60 cents goes to a franchise system. But in emerging markets such as Latin America, in the Middle East or in Asia-Pacific, the chains represent less than 20% of the market. As these geographies grow and mature, chain share will increase and restaurant franchise opportunities could move the needle to achieve a share as high as that of mature markets.

Over time, international chains have expanded into new markets through franchising. Some establish a business foothold and franchise the rest of the system, while many seek out Master Franchisees directly who can acquire brand rights to a large territory and who also bring specialization in a geography and can help through the translation of the brand and local nuisances. Franchising also involves a lower investment than opening a large number of new locations, allowing for a more capital-light model with better margins.

And there are benefits for franchisees too. Franchising allows local players to tap into international brands that often have higher unit sales (compared to local brands), and import international systems for processes and efficiency without having to make a big investment initial to set them up (and save time as well). The payout time also tends to be quicker than starting a new concept from scratch, and franchisees get support and guidance (on the contrary, if you’re running your own concept and it doesn’t work , you don’t have to call anyone but yourself). For those looking to create a new concept, if they are doing less than 20 units it is often best to franchise – think of all the costs involved in creating a new concept including logos, training manuals and standard operating procedures, design, operations and systems, all should be created from scratch.

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Cecil N. Messick