Do you think you have a food truck concept that should or could be mentioned in the same conversation with McDonald’s, Subway or other successful food service franchises? Do you have a great food truck concept? If so, our article today explains how to determine if you’re ready for food truck franchising.
Did you know that franchise businesses are forecasted to represent over 4.5% of U.S. GDP or $493 billion in 2015? Also, restaurants are the largest franchisors, with roughly 155,571 quick service franchise restaurants and 36,981 full-service franchise establishments in operation in 2014.
So what separates these restaurant models from your food truck, or better yet, should you be thinking of joining them?
Why Start A Food Truck Franchise?
So why would you want to franchise your food truck concept? Here are three reasons:
When it comes to growth, the big barrier for any in the food truck vendor has always been capital. Since the franchisee model provides the initial investment in the truck, growth can occur at a much lower cost.
As a franchisor, your investment in growth is largely limited to the development of your franchise documentation and franchise recruiting costs. And since in most cases it’s the franchisee that signs the truck and commissary leases and commits to various supplier contracts, you are able to grow with greatly reduced personal risk.
Another barrier facing many food truck owners is finding and retaining good food truck managers. Franchising allows the food truck owner to avoid this problem by filling the food truck manager slot with a highly motivated franchisee that has a stake in the business.
And for a final reason to franchise your food truck concept is that opening a new food truck in another city takes a lot of time.
Here are just some of the tasks that need to be repeated when you open trucks in multiple locations:
- Find a commissary
- Find parking locations
- Set up financing
- Recruit the staff
- Train staff
- Purchase the kitchen equipment
- Purchase the truck
- Get licensed
- Purchase inventory
- Etc, etc, etc…
The bottom line is, the number of food trucks you can open across the country at any one time is limited. Franchising solves this problem because it’s the franchisee that does most of the heavy lifting. Thus, franchising not only provides a growing food truck brand financial leverage, but it allows for resource leverage as well.
Is My Food Truck Franchisable?
Almost any type of food truck can be franchised, provided it meets these basic criteria. In order to do sell franchises, your food truck must be credible in the eyes of prospective franchisees. Ask yourself these 3 questions.
- Is it professionally designed?
- Is the concept unique?
- How HOT is your concept?
The sizzle factor can be determined based on the number of unsolicited franchise inquiries you’ve received. If you regularly are approached to franchise, it’s a good bet that your franchise will sell.
Can you reproduce everything in your food truck and are the operational processes and systems teachable?
Finally, we hit the big item; Profitability. Your food truck concept will need to provide an adequate return to both you and your franchisee. This means, you will need to adjust the franchisee’s potential returns by deducting a royalty. If your franchisee can generate an adjusted 15% return on investment, then your concept may be a good candidate for food truck franchising.
The Process Of Food Truck Franchising
If you do make the decision to franchise your food truck concept, your must first address numerous issues confronting a new franchisor: speed of growth, territory development, support services, staffing, and fee structure, to name a few.
You will then need to develop a franchise contract, a franchise disclosure document (required by the FTC), and, depending on where franchises are being sold, state registrations or filings.
Quality control generally translates into the development of an operations manual and well thought out training programs, if they are not in place already. Your manual should contain everything on how to open and operate your food truck, although there are certain protections that you may want to build in relative to the protection of recipes (use of spice packets, etc.). You will also include quality control checklists, policies, procedures, and tactics that will allow these systems to be uniformly enforced.
Finally, you will need to market and sell franchises. You will need to develop a plan for attracting prospects and the necessary materials (brochures, videotapes, etc.) that will help make the sale. Make sure you incorporate your food truck franchising message into your website. Since franchise sales are highly regulated, you will need to be educated in proper sales, disclosure, and compliance techniques.
As a franchisor, the first thing you will learn is that you have entered a completely different business. Your new role as a franchisor will be selling and servicing franchisees. The key to success in franchising is successful franchisees. And if you provide a system that allows you food truck franchises succeed, perhaps you will be part of that conversation about McDonald’s & Subway.
We’d love to hear from those who have looked into food truck franchising even if you choose not to go that route. What did you have problems with and what advice would you give others looking to franchise their food truck?