A franchise is an agreement that allows recognisable brands to expand into new territories by granting independent local business owners the right to sell their goods or services in exchange for a share of the profits. This business model lowers risks for entrepreneurs hoping to open profitable food-service businesses under an already established and trusted brand name.
In the following pages, we have outlined the complete process of launching a successful fast food or quick service restaurants franchise in the United Kingdom, covering everything you need to know from start to finish. Consider this your first course of action to succeed in the fast food franchise business.
A Step-by-Step Guide to Opening Your Fast Food Franchise
Here are the main steps involved in the process of opening a fast food franchise.
Step 1: Select the Franchise
The first step is to choose a well-established fast food chain that aligns with your goals and abilities. Read the next section to learn how you can pick the right franchise.
Step 2: Picking a Location
Identifying a great location plays a pivotal role in the success of your fast food restaurant. Research demographics and competition in potential areas first to foresee profits. Consider foot traffic, accessibility, and market trends when location scouting. Unsure which location might work the best? Consult the franchisor - they'll have a team of advisors to help you along with this step.
Step 3: Contact the Franchise
Contact the chosen franchise and express your interest in becoming a franchisee. They will call you for a meeting to guide you through the membership process and financial requirements.
Step 4: Contract Analysis
Before signing the franchise agreement, make sure you understand the terms and conditions. Hire a franchise attorney to assist you if necessary. The duration of the contract, the franchise fee, or even future royalties are all important points to take into account from the very beginning.
Step 5: Financial Research
Explore the different financing options to start your restaurant franchise. This may include your personal savings, bank, or investor loans. You shouldn’t put yourself in a fickle economic situation from the start, knowing that the first months of a business are going to be financially complicated.
Step 6: Training & Preparation
Complete the training offered by the franchise to familiarise yourself with operational processes, quality standards, and personnel management. This is an essential step to be able to perfectly apply the procedural details that have made the franchise successful.
Step 7: Legal Obligations
Luckily, there are no legal obligations for you to fulfil as per the current regulations in the UK to open a fast food franchise apart from acquiring a Franchise Disclosure Document (FDD) from the franchisor. The British Franchise Association (BFA) self-regulates the industry, and there are no licences, registrations, or duties to be paid. The only thing you legally have to do is register with the HMRC’s company house as a limited company.
Step 8: Establish the Franchise
The next step will be to establish your franchised restaurant physically. This will include finalising the interior design, setting up the kitchen, buying furniture, hiring a team, and going through procedural training.
Step 9: Grand Opening
Lastly, you will have to plan and execute the grand opening of your franchise. This opening will require careful consideration of all the intricate details. Streamline your digital presence while thoughtfully engaging local communities through sensitive outreach. Foster customer connections on social media in a way that cultivates genuine relationships. Most importantly, your inaugural night must showcase flawless operations that will set the standard for the exceptional dining experiences to come.
How Do You Choose the Right Fast Food Franchise?
Choosing which franchise is a crucial decision that will largely determine the success of your business. Here are some steps you must follow to choose the right fast food franchise.
Assessing Your Interests & Skills
Start by assessing your interests, skills, and goals as an entrepreneur. Opting for a franchise opportunity that you are passionate about and is within your skill set will increase your chances of success. If you love finger-lickin’ fried chicken, then it might be worth considering what options you have for this specific fast food.
Extensive Research
Do thorough research on the different franchises available in the fast food industry. Analyse their performance history, notoriety, geographic presence, and brand values. It’s important to choose a franchise that aligns with your future plans and market trends.
Market Research
You must also conduct thorough market research and take the specificities of your local market into account. A business opportunity that produces excellent results in one region or city may not be as successful in another. Analyse the competition and identify opportunities. The categorisation of your potential customer base is also important for realistic market research. For example, parts of London with high income may be more geared toward healthy options, while lower-income areas may be geared more towards low-cost options.
Explore Existing Franchisees
Visit existing franchisees already in operation to gather their opinions and experiences. Ask to speak to the owners if possible. Their feedback can give you a better idea of what it is really like to operate a specific franchise.
How Much Does it Cost to Open a Fast-food Franchise in the UK in 2024?
Let’s break down the costs you could expect to pay in the UK to open a restaurant franchise.
Franchise Fee
This is a payment a franchisee pays to the franchisor as a cost that gives the franchisee the right to operate under the franchisor’s brand and business model. In the case of fast food franchises, based on the franchise models this typically runs you anywhere between $30,000 and $500,000. The fee applies to your first restaurant and is often subsequently lower for your next restaurants under the same brand.
Real Estate
Real estate costs represent a significant portion of total expenses. The amount you end up laying out will depend on the size and location of your restaurant, as well as on the real estate market. However, the general rule is that rent should come to less than 10% of your gross sales.
Initial Investment
Once you’ve signed an agreement with a franchisor, you can expect to typically spend between £40,000 and £100,000 for construction, equipment, signage, and decor as an initial investment.
Stock & Inventory
You should expect to spend anywhere from £3,000 to £20,000 on the initial inventory purchases, including perishable food and beverage supplies, as well as retail items such as packaging and bags.
Working Capital
You’ll need money to cover your operating expenses until your restaurant becomes profitable. A standard rule of thumb is to be able to finance at least three months’ worth of operating expenses. If you have 10 staff members all earning £20,000 per year, that means you’ll need roughly £50,000 in the bank to cover wages.
Training & Support
Some franchisors charge for initial training and ongoing support for your managers and employees, either at your location or at a company facility. These costs can set you back anywhere from £50,000 to £150,000.
Royalty & Advertising Fees
Fast food franchises generally take a percentage of gross sales as a royalty. These fees can cost you anywhere from 3% to 8% of sales or profits.
Technology Costs
This includes expenses for computers, restaurant POS systems, kitchen display system, receipt printers, digital menu boards, security systems, Wi-Fi and internet connections, and the development of an online ordering system.
Keep in mind that all of these costs are general estimates, and actual costs can vary greatly. You can find some real-life fast-food franchise case studies here for an in-depth look at how franchises operate.
What Type of Fast Food to Choose?
The fast food industry is massive, offering a multitude of choices when it comes to concepts and cuisines.
Traditional Fast Food
Traditional fast food brands offer standardised menus with hamburgers, fries, sodas, etc. These franchises are generally well-established and have great recognition. However, it is quite difficult to join these brands due to the higher financial costs and a large number of already established franchises.
Healthy Fast Food
Health-focused fast food brands and organic products are becoming increasingly popular with a health-conscious consumer base. These could be a great starting point for entrepreneurs as consumers are becoming more health conscious, and food trends clearly indicate a bright future for brands promoting healthy eating practices.
International Cuisine
Franchises offering culinary specialities from around the world (Chinese, Indian, and Italian) can attract a diverse and curious clientele. Depending on your market research, these options can be very interesting to explore.
Coffee & Snacks
Cafes and snack bars such as Chaiiwala, offering hot drinks, pastries, and snacks, are also popular options for customers. It’s a sure value that has existed for many years and will remain relevant for a long time to come. Plus the profit margins on coffee is astronomical.
Sustainable Options
Consider eco-friendly brands promoting locally sourced ingredients and environmentally conscious packaging to tap into the growing demand for sustainable dining experiences. This choice not only meets evolving consumer preferences but also sets your franchise apart for long-term success in an environmentally aware market.
Why Choose a Fast Food Franchise?
Starting a fast food business presents you with three options: start your own fast food brand to eventually franchise your business or buy a franchise. Compared to a full service restaurant, opening a fast food franchise has multiple advantages over starting a brand from scratch.
Brand Awareness
By joining a well-established franchise, you can instantly benefit from brand recognition. Customers already know and trust the brand, making it easier to get customers through the doors. In simple words, you don’t need to spend a million pounds on marketing or need to wait months to grab your first customer.
Access to Proven Strategies
A fast food franchise provides you with a trunk full of proven and well-optimised management strategies. You can benefit from already established procedures, including recipes, operational processes, customer services, staff training, and other crucial insights. Generally, several other restaurants have already applied these methods, guaranteeing success.
Assistance with the Establishment
Fast food franchises such as McDonald’s, Nandos, and Burger King typically provide furniture and bear interior design costs as part of their franchise package to maintain brand consistency across locations. This can help you avoid the whole process of developing and ensuring an aesthetic appeal for the customers.
Support & Assistance
Franchisors usually provide buyers with ongoing technical support, including marketing strategies, operational advice, and customer retention policies. This can be extremely valuable, especially if you are new to the restaurant industry. This way, you know you’re never alone, and it prevents you from making unforeseen mistakes.
Reduced Risk
Compared to starting an independent brand and trying to franchise your business, opting for a fast-food franchise reduces the chances of failure. Franchises have already stood the test of time and developed a winning formula that you can use for your gains.
Conclusion
In the end, opting to start a franchise can bring considerable benefits. However, it is crucial to take a strategic approach right from the very first step. Start with selecting a franchise that aligns with your experience and future goals. Pick a strategic location based on data provided by market research. Ensure you fully understand the legalities of the contract and plan a grand opening. Lastly, don’t forget to benefit from the latest technologies, such as POS systems and inventory management software, such as 3S POS.
FAQs
Do You Require a License to Open a Fast Food Franchise in the UK?
No, you don't need to get a license or pay any fees to the government to open a fast-food franchise in the UK. The only thing you need to have is an FDD or Franchise Disclosure Document.
How Much It Costs to Open a Fast Food Franchise in the UK in 2024?
Opening a fast food franchise in the UK in 2024 can cost you anywhere from £100,000 and £500,000.
What are the Best Fast Food Franchises to Open in the UK?
The most profitable franchises in the UK for 2024 include German Doner Kebab, Subway, Pizza Hut and Five Guys.
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