QSR Best Franchise Deals: What to Look for in an Affordable QSR
The high costs associated with starting a fast-food restaurant are prohibitive for most entrepreneurs. Finding an affordable QSR opportunity that also aligns with your goals and aspirations is the key to success. Here are some things to consider.
STRONG CONCEPT & POTENTIAL FOR GROWTH
The QSR market is a vast and varied field, so any restaurant with a unique concept, or a focus that caters toward a specific demographic, stands a higher chance of carving out its position against the competition.
Some franchisors provide market research on their given industry, but it is equally important that you study the growth potential in the local community you plan on opening your business. Grab-and-go salads may be the hottest franchise concept in your area, but if your neighborhood is already saturated with such restaurants, you may want to pursue a different avenue.
To figure out whether or not you will be able to make a living from the franchise once you have invested, you will need to estimate potential earnings. Some franchisors provide average earnings information in their FDD, while others may require you to make your own figures by gathering information from current franchisees.
One of the best ways to determine a franchise’s potential profitability is by analyzing Item 19 of the FDD, which outlines the business’s financial performance. Also known as “The Earnings Claim,” Item 19 is an optional disclosure under the Federal Trade Commission. Three years’ worth of financial statements are contained in the FDD, providing you a healthy glimpse into a franchisor’s ability to thrive. A lawyer or accountant can help you decipher these documents and determine which franchise will be the right financial fit.
Almost every QSR franchise entails ongoing fees to be paid regularly by the franchisee on top of initial investment costs. The FDD will lay out the percentage amounts and payment schedules of these fees in detail specific to each franchisor, but a couple of the most common categories of ongoing fees are:
ROYALTY FEES. This fee is commonly expressed as a percentage of the gross revenue accumulated by a franchisee. Sometimes it is expressed as a fixed, recurring amount, (e.g. $500/month) regardless of revenue figures. The average royalty percentage for a QSR franchise is 5.2 percent, but can range anywhere between 1 to 50 percent, depending on the franchise.
MARKETING FEES. Since one of the benefits of investing in a franchise is consistent and ongoing marketing support, most franchisors require the payment of a regular fee paid toward those efforts. As with the royalty fee, it is detailed in Item 6 of the FDD and can occur either as a percentage of sales or a fixed amount.
Some franchisors also require that a franchisee purchase certain products or services directly from the franchisor or from specific vendors affiliated with the brand. In this situation, it is important to consider whether the pricing is competitive or not.
Whether or not the costs of these ongoing fees can be deemed reasonable may be entirely subjective and vary from franchise to franchise. It is important to consider the overall opportunity rather than the details of any specific item cost.
Opening a Gold Star franchise is easy, with very low entry costs compared to other brands in the QSR restaurant sector. Our team will work with you to find the optimal real estate in your community, and then our build-out team will walk with you through every step of the process, from property lease or purchase to grand opening. Our royalties and marketing fees also are calibrated to be in line and or below market standards.
Gold Star Chili is a reasonably priced franchise opportunity in the QSR sector for any enthusiastic, entrepreneurial-minded investor who values tradition and growth.
VALUE FOR VALUE
At the end of the day, you want to know that you are investing in a franchise that will be equally invested in you. As an award-winning brand backed by over five decades of franchising experience, Gold Star Chili offers both new and seasoned entrepreneurs an exciting and affordable opportunity to join a winning family restaurant franchise. By providing unparalleled support, marketing, and a world-class franchise system, Gold Star is committed to seeing our franchisees succeed beyond their wildest dreams.
If you would like to learn more about franchising with Gold Star Chili, visit us.