Small Business

Getting Franchise Plans on a Roll


By Karen E. Klein Q: I am exploring a high-end fast-food restaurant idea. Are there any resources for someone looking to model a business plan around multiple operations and growth strategies? I'd like the basic tenets for building a franchise scenario into a brand-new business plan. -- K.L., New York

A: Although some might say that you're jumping the gun -- planning for a franchise operation when you've yet to get one successful outlet off the ground -- I believe you are on the right track. Preparing for the future by conducting a detailed analysis of the big picture is a smart strategy. And if you want to build an empire, rather than a one-store operation, why not go for that goal right from the start?

You're going to have to be realistic, however. It will take more time, more planning, and more money to launch a franchise than it will to open an individual business. You should get your initial location started and operating successfully before trying to expand. Hire a franchise consultant who can help you to set up the system you will use to sell future franchises. The law regarding franchises is complex, and much of it varies from state to state, so you will want to make sure that you set up your operation with these legal considerations in mind.

The up-side of a franchise, as opposed to a chain-store operation, is that the capital for expansion comes from your franchisees, rather than loans or other sources. You must prove, however, that your concept will work as a franchised operation. Ask yourself these questions:

Will your product or service appeal to a large geographic segment, and hold up across multiple locations? If it won't play in Peoria, you probably won't be able to sell the concept across the country.

Can you break down your core product or service into components that can be written down, transferred to a franchisee, and then "taught" to new owners? The strength of a franchise is that the product or service is exactly the same from location to location. It's vital that customers be able to count on specific quality, no matter which location they visit. If your concept can't be systematically recorded and taught, it won't franchise well.

Can you maintain quality across multiple locations? Or will your product lose something in the translation from mom-and-pop to big corporation?

Do you want to become a corporate manager, selling your concept to potential franchisees, rather than an old-style entrepreneur who concentrates on building one business and catering to long-term customers? There is an important style difference here, and an entrepreneur who fits one category might not slot into the other.

Michael H. Seid, a franchising consultant and co-author of Franchising for Dummies has a section on strategic planning at his Web site. It's free, and it has the potential to provide a detailed blueprint for structuring your company.

CHEW ON THIS. The National Restaurant Assn. also boasts has an excellent guide for restaurant owners and is a good group to join for networking possibilities. Nation's Restaurant News

(you will have to register online) and the International

Foodservice Manufacturers' Assn., an industry organization that puts on trade shows, workshops, and

how-to presentations are both excellent resources. If you can manage the trip, Seid urges you to attend an upcoming conference aimed at chain operators to be held in Miami Beach, Fla. in February, 2003. Says Seid: "The program is very finely done, and the speakers really teach the nuts and bolts part of running a chain of restaurants."

Two successful high-end, fast-food restaurants are Baja Fresh

and Panera Bread. Both are public companies and you can access lots of good information about them on their Web sites. Baja Fresh recently was purchased by Wendy's (WEN) and Panera trades as PNRA

. Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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