Chain vs. Independent vs. Franchise

1
Chain vs. Independent vs. Franchise

• Which is for you?

2
Chain Restaurants

• Brand Recognition
• Power Brand
• Image
• Advertising
• Consistency
• Market Analysis and Site Selection
• Analyze market for demand
• Computer generated programs for determining best
  location

3
Chain Restaurants

• Access to Capital
• Successful chains have easier access to
  investment money
• Sometimes get a better interest rate
• Quantity Purchasing
• Chains can centralize purchasing
• Can afford quality testing

4
Chain Restaurants

• Cost Control and MIS
• Intricate cost control methods
• Sophisticated MIS systems
• Training Programs
• In-depth training programs on all phases of the
  operation
• MIT programs
• Opportunities for advancement

5
Independent Operations

• Name Recognition
• Name known throughout the community
• Restaurateur involved in community affairs, knows
  many of the customers
• Market Analysis and Site Selection
• Hire Consultants
• Gut feelings
• Market Niche

6
Independent Operations

• Funding
• Often difficult to obtain
• Can be easier if known by the banker
• Purchasing
• Flexibility
• Ability to find optimum price/quality ratio

7
Independent Operations

• Cost Control and MIS
• May have ECR/POS
• May not need sophisticated cost control measures
• Owner very close to daily operations

8
Independent Operations

• Training
• Usually not as in-depth as with chains
• Manager may develop more close personal ties

9
Independent Operations

• Decision Making
• Very flexible
• Adapts quickly to changing market conditions

10
Franchised Operations

• Business Format Franchising
• Product and trademark
• Marketing manuals
• Training
• SOPs
• Quality Control

11
Franchised Operations

• Staff Support
• Site selection and market analysis
• Training
• Troubleshooting
• Marketing
• Advertising
• RD
• Quality control

12
Franchised Operations

• Study
• 86 of franchises opened within the last five
  years were still under the same ownership and 97
  of them were still open for business.
• 62 of non-franchised businesses closed within
  the first 6 years of their existence due to
  failure, bankruptcy, etc.
• The franchise industry accounts for 40 of all
  retail sales in the US

13
Franchised Operations

• Study
• The average initial franchise investment is
  250,000- excluding real estate.
• The average royalty fees paid by franchisees
  range from 3 to 6 of monthly gross sales.
• Average length of a franchise contract is 10
  years
• Top franchise industry- Fast Food