Is Bigger Best? The Pros and Cons of High-Investment Franchises

When most people think of a franchise business they immediately visualise big brand names such as McDonald’s, Starbucks and Subway. Obviously, these franchises are the biggest, but are they the best? Just as with any size of franchise, there are pros and cons to high-investment franchise opportunities so here’s what you need to know before you invest.

>> Read more:

• How Investing in a Franchise is Worth it
• Why Small Franchises Are a Good Investment
• Franchise Investment: The Good, The Bad and The Ugly
• Invest in a franchise or go it alone?
• Is investing in an established franchise best?
• Making your mind up: Top 5 things to consider before you invest in a franchise
• Reasons why you should consider investing in a new franchise system

The advantages of high-level investment franchise

A benefit of buying most franchises is the immediate brand recognition that your business gains. This is multiplied tenfold when you become part of a global franchise such as KFC or Costa. You’ll have access to a customer base who are loyal and trust the brand completely. Equally, as well as having a proven brand name, the business model is also well established and often successful. This does not guarantee that your franchise will be profitable, but with a track record of successful franchisees world-wide, there’s a pretty good chance you’ll succeed.

To help you on this path to profitability, you can expect the level of coaching and support you’ll receive to be first class. The training package that is provided by large franchises are usually extremely comprehensive with all the information you need to run your business, from a technical and management perspective. This is not to say that the training that’s offered by lower investment franchises are inferior, but the pure scale of the big brands means that the support they can provide is unmatchable by many smaller franchises.

What about the disadvantages?

It can be difficult to buy a high-investment franchise, even if you have the capital to do so. Very often big brands recruit multi-unit, and sometimes, multi-brand franchisees. This is because, just like the franchise has a proven track record, if a franchisee has run other units, they also have demonstrated their ability to run a busy and pressurised business.

Existing franchisees also understand the strict rules, responsibilities and obligations that they are expected to comply with. They have shown that they can conform to the terms of the franchise agreement which is crucial for consistency of the brand, products and service provided. The rules and guidelines imposed on franchisees can be even more rigorous the bigger the brand. Customers have an expectation of the business and the franchisor will want franchisees who can deliver on these expectations, rather than offer innovation and entrepreneurial spirit.

So, what high-investment franchise opportunities should you consider if you’ve got significant capital to invest and an aspiration to become part of a world-famous franchise?

McDonald’s

If you’re serious about franchising, then what better way to enter the restaurant industry than by becoming part of a McDonald’s franchise. As the world’s largest restaurant chain with more than 34,000 restaurants worldwide employing 1.8million people, this really is an opportunity worth considering. With over 1,250 restaurants in the UK serving approximately three million people every day you could join the franchisee network that own and operate around 70% of McDonald’s restaurants.

A report by Mintel found that McDonald’s is by far the nations favourite casual dining restaurant with 43% of the 2,000-people surveyed stating that they’d eaten there in the last 3 months. So, how has McDonald’s maintained its popularity despite tough competition coming from the trend for posh burger joints? Well, this global giant has continued to innovate and evolve to meet consumer demands. In 2015, McDonald’s trialled a table service concept and a new ‘signature collection’ consisting of three gourmet burgers is being rolled out this year, proving that they can still provide the price, value and quality of food that people want.

And of all the food franchises for sale, starting a McDonald’s franchise is a pretty good choice. Not only will you become part of one of the most recognisable brands in the world, but you’ll also receive some of the best training and support in the industry. And it’s in their best interests to ensure you have the quality coaching needed for you to succeed. A McDonald’s franchise is typically a 20-year commitment so selecting the right franchisees and then training them to run profitable businesses is a priority for the overall success of the company.

KFC

The Kentucky Fried Chicken brand is recognised worldwide, with nearly 14,000 restaurants in 112 countries. The first store was opened in the UK in 1965, and now 850 locations across the country. Approximately 75% of KFC restaurants are owned and operated by franchisees selling 690 million pieces of chicken a year to Brits who can’t get enough of the Colonel’s secret recipe.

There are four types of restaurant that you can own as a KFC franchisee. There’s the standard restaurant in city centre locations, drive-thru for roadsides and retail parks, food courts for busy shopping centres and express stores for residential areas. The sites have different requirements with varying investment costs. However, the investment will be significant when you buy any KFC, so you must be certain that this brand is the right fit for you before you sign on the dotted line.

Costa

Considering a coffee shop franchise offers an exciting opportunity and with the industry continually growing, it’s a great time to consider a franchise in this sector. In 2015 alone, £7.9 billion was spent in the 20,728 coffee shops in the UK. In fact, according to Allegra’s Project Café 2016, the number of coffee shops is expected to increase to 30,000 by 2025, producing an impressive annual turnover of £15 billion.

Costa is the leading coffee franchise in the UK with 2,000 units operating in the UK alone. The coffee giant has stores as well as Costa Express franchises which are operated on a smaller scale in corner shops and petrol stations. However, due to the impressive growth that Costa have had with franchising, they are not currently recruiting any new franchisees in the UK.