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food franchises industry

Why the Food Franchising Industry Is Thriving . . . and Increasingly Multi-Unit Dominated

It’s often said that franchising allows you to go into business for yourself, but never by yourself. What this means is that when you become a restaurant franchisee, you’ll oversee the hiring, training, and day-to-day operations of one location or juggle multiple locations within the framework of a multi-unit franchising setup.

While this may sound like an extremely entrepreneurial undertaking informed by perhaps hundreds of hours of research and deliberate financing, remember that the franchisor is there to help you along your journey.

Why the Food Franchises Industry Thrives Rain or Shine 

When you join a restaurant franchise, you can expect to benefit from name recognition and nationwide advertising initiatives as well as financing, training, and operational assistance. You’re essentially banking on years, or even decades, of widespread name recognition and the fact that customers enjoy the atmosphere, food, and culture of that restaurant franchise.

A Winning Formula and Accessible Financing

Taking a look at  in the country, it shouldn’t come as a surprise that the most successful franchises overall tend to be food franchises. Food franchises capitalize on a winning formula by which franchisors provide franchisees a detailed roadmap (for example, site selection informed by demographic studies and streamlined staff training) of how to ride the wave of widespread name recognition and time-tested routines.

Franchised restaurants have discovered a winning formula for capitalizing on the built-in demand of big-name restaurants and the fact that people are drawn to the most popular restaurants as they drive along or pace through the mall. The initial investment for a restaurant franchise is often quite manageable because franchisors understand these factors and your future customers.

What’s more, financing for a restaurant franchise is relatively easy to acquire since banks understand the high chances of your success, the local area, and the equipment that your operator is likely to require. This means that startup financing shouldn’t pose as many challenges as other franchising industries, and you may even receive extra financing help from the franchisor.

Food Franchising Industry and Multi-Unit Domination 

Did you know that 53% of the 450,000 franchises in the United States operating today are controlled by multi-unit owners? Multi-unit restaurant ownership is even more popular: over three-fourths of restaurant franchisees now oversee multiple food franchises. The Wall Street Journal ran an article a few years ago discussing the fact that restaurant chains actually favor awarding new outlets to franchisees who already own more than one location.

In fact, larger restaurant franchises have started prioritizing the sale of company-owned locations to multi-unit owners who have a track record of weathering economic recessions and finding a way to turn a profit at more than one location. From a franchisor’s point of view, franchisees who are multi-unit are more attractive because of more seamless access to capital and the ability to offset possible underperformance at one location with stellar performance at other chain locations in the area.

Benefits of Multiple Franchise Units

Fascinating research out of Cornell University uncovered a few interesting findings about the food franchising industry. Researchers there found that franchisors were more likely to establish multiple food franchises around company-owned locations that shared similar geographic and demographic details.

This is done for the benefit of franchisees since it affords you the opportunity to take advantage of economies of scale, training, ongoing operational support, and local advertising initiatives spearheaded by the company-owned franchise location. On top of that, multi-unit food franchisees usually enjoy easier access to capital and preferential treatment by franchisors!

If you’re interested in learning more about the opportunity to open a franchise or two with Pretzelmaker, visit our website today!

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