|Four options for franchising your restaurant|
By Chad Finkelstein
July 12, 2012
Once you have made the decision to either franchise your restaurant or acquire the rights to develop a franchised restaurant, there are several franchising options available to you. The availability and advisability of these options will depend on the nature of your franchise system, the territory within which you can conduct business and your overall business acumen. The following is a list of four examples:
Direct franchising: Direct, or unit, franchising is the purest form of franchising a business. Under this model, you grant the franchisee the right to open one franchised restaurant at one location, with a specified geographic range that may be protected from other restaurants of the same system. In permitting the franchisee to open at one particular location (say, an intersection), you may or may not protect a reasonable geographic boundary around that intersection within which you will not franchise any other locations. This is referred to as an exclusive territory, and, depending on your type of restaurant and growth plans, it may or may not make sense to grant on an individual basis. Additional franchises may be granted to your franchisee based on its performance at the first location. In most cases, it will be rare for the franchisee under this model to be required to satisfy performance criteria or sales quotas.