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Your New Startup: Should You Franchise Or Go It Alone?

Restaurants are a popular entrepreneurial option for people with a love of food and a talent for management. If you’re interested in exploring this option, one of the first questions you’ll have to answer is whether you want to start your own restaurant or open a franchise of an existing regional or national chain.

There are advantages and disadvantages to both, of course. There are issues of menus and pricing that could be easier or more difficult under each model, and you must think about marketing as well. The big picture takes some careful planning.

For now, let’s look at the area of equipment. Restaurants require a large number of expensive, specialized pieces of machinery to operate properly, and the process of choosing and buying that equipment differs greatly between franchises and independent restaurants.

Here are some of the ways you will see differences between equipping a franchise restaurant and equipping your own.

Choosing Equipment

With a franchise, a lot of work has already been done for you. Just as the chain has already determined optimum inputs, cooking processes, and even restaurant layout, it has also determined which equipment will best serve your needs under their standards.

They’ve saved you a lot of work by doing the background research for you, but that also means that you may end up with equipment you wouldn’t have chosen yourself. You may have different criteria in mind for a commercial ice maker than your chain does, choosing a different shape of ice or type of storage.

Pricing

Because chains have a very specific, often proprietary design for the equipment they use, they probably have an exclusive supplier. As such, there is likely to be a contract arrangement under which the manufacturer supplies the machines in some guaranteed quantity each year with a set price. This circumvents the nonstop comparison shopping and price negotiation associated with buying your own.

At the same time, it intercepts your efforts to save money. You may be able to find a local supplier, a liquidating restaurant, or some other arrangement under which you can get a better price than even a franchisee would get. A contract arrangement by a chain can set a price ceiling that protects you, but it can also create a floor that costs you money.

Service And Maintenance Access

A restaurant owner is a busy person. With all the personnel issues, books to keep, and supplies to order, the last thing you need is to perform maintenance or repairs on the restaurant’s appliances. Franchises allow you to have that work done by the chain’s staff, and response times are typically quick because if you’re losing money, they are too. In addition, the technicians are skilled on those standardized machines we mentioned earlier.

At the same time, you might be able to handle routine work yourself without having to wait on a chain technician, who might be hours or days away. Warranty considerations may require that you leave all repairs to the chain staff, handcuffing you when there’s a breakdown.

Purchasing equipment is just one piece of the restaurant puzzle. But it gives us a good idea of how to evaluate the choice between franchise and independent. Remember that every part of this selection process will involve that same balancing act. Only when you properly manage those choices will you make the right decision.

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