Franchise vs Independent – Which is more profitable with today’s economy and competition?
In doing some research into Cafe ownership, I have made some startling discoveries. Foremost is the shocking amount it costs to own a franchise. For instance, it takes more than 2 million dollars if you decided to open a McDonald’s in your area. That’s right, I said two. 7-11 is a close runner-up. Franchises can encompass everything from an NHL hockey club to a ghost-busting business to your local grocery chain. most commonly, we think of the smaller, more frequented fast-food places and coffee shops. Those are up there in start-up costs too. Makes it very difficult for the average person to own one, doesn’t it? Right now, I would like to talk about the major fast-food franchises vs independent ownership.
Not that I was contemplating owning a franchise, that was out of the question for me, for one main reason – I want to serve whatever I want to, and have my own, ‘daily specials’ and not have to serve greasy burgers if I choose not to. I don’t want to. One other major drawback that I didn’t want to face is the restrictions on shop supplies. I have learned some disturbing facts about what is allowed and what is not when supplying your little franchise restaurant.
Most major chains do not allow you to purchase supplies or stock from smaller grocery stores, or bulk stores such as Costco. If by chance you run short of straws, you cannot simply go to your nearest dollar store in a pinch, to pick up a couple packages to get you by until you manage to get to your main supplier. You are stuck making do without, and your customers will have to pop a lid in order to enjoy their favourite soda. Same rule applies to sugar packets, salt and pepper singles. And it doesn’t stop there. Did you run short of coffee? Guess your
customers have to wait until you are supplied the chain’s warehouse. Don’t know about you, but I would not want to be telling my regulars that they don’t get their coffee this morning. Some people can get awfully grouchy without that morning cup of Java. Not to mention the fact this is an excellent way to lose customers.
This means that all of your supplies, from bulk ketchup to burger patties must be purchased by the warehouse owned by your chain. For example, if you recently purchased a Dairy Queen, and run short of cones for your kiddie-sized cones, you have none until the Dairy Queen warehouse, or head office sends you some more. Some disappointed kids there.
And it gets better. Your supplies that could typically be purchased at the grocery store across the street or quickly solved at a the local Wal-Mart, for a reasonable price (if you can call any price today reasonable) will cost you 2 to 3 times more through your chain’s supplier. They all have their own factories and warehouses where many of the necessary items are made or processed. A headquarters for a major chain will have contracts with other large supply companies, for those things they cannot produce. Items such as milk and bread products are purchased through companies like Sealtest and C&S Wholesale Grocers.
The absolute best part of all when running a franchise is how your head office will tell you how to run your restaurant. Where things are placed, to what advertising is allowed and what is not. They do not allow you to have your own specials. So if you accidentally bought too many burger patties and have run short of freezer space, chances are your burgers will spoil.
If you decide to go independent, you have choices. If you decide to serve healthy and appetising foods, you can do that. If you choose new and exciting coffee flavours, that choice is yours too. You will be subject to the laws of sanitation, just like the rest, but these may be somewhat more stringent than those of a major franchise. The reason for this is with franchise, you have your head office down your backs all the time, independents do not. Understandable for the local health department to be strict with you. As a customer, I would expect no less.
In closing, I have to say, for me anyhow, independent is the way to go. It is harder to make a name for yourself, and build a steady clientèle than the big names, but in my opinion, the extra effort is worth being ‘independent’. So when I open my Cafe, here is what you can expect from me: I promise not to run shy of your favourite flavour of coffee, or serve you anything but the freshest food possible … being independent, I can vow to have savoury, old-fashioned meals and desserts! I may be small, but will have the freedom to choose the best of the best quality foods. Who wants to be told what to do anyway?