Fast-casual restaurant owners should be cautious when taking the franchise leap. Experts say knowing when to franchise your concept could be the difference between positive profit margins and angry investors.
Thom Crimans, president of FranNet MidAmerica, sees many restaurateurs franchising too quickly. He said some operators get excited because their customers often praise their great menus and then ask about franchise opportunities.
‘But their (customers) attitude changes when it comes time to write a check,’ Crimans said. ‘It’s very easy for me to walk into a place and say, Wow this is really good. I wish I had one in my town. It’s another thing for me to plunk down 2, 3, 4 or 500,000 dollars and commit two years of my life to getting it started.’
Bruegger’s Bagels is a fast casual that shot out of the franchising gate too fast and eventually faltered, said the company’s chief executive Jim Greco. ‘We had a number of competitors. Some of them were publicly financed,’ Greco said. ‘All of them - including us - were looking to grow as fast as they could.’
Within 18 months of franchising its concept, Bruegger’s grew from 50 units into a 155-unit chain with stores in 16 states. System-wide, it earned $81 million in sales in 1994, ranking as the largest bagel chain in the nation. Read more here.
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