Food Franchise Mistakes: 5 Things to Avoid

A food franchise can create a financially rewarding opportunity for nearly any entrepreneur – whether you’re a beginner or an experienced business owner.

But if you’re not careful which food franchise you choose, or how you operate your business, then it could become one of the worst mistakes you ever make. Even the simplest food franchise will require you to commit your time, money and energy. If you make a rash decision based only on high hopes and dreams, then all that money and time could be sucked down the drain.

 

 

If you want to start a successful food franchise, but don’t want to make the common mistakes that will cost you your business.

 

Here Are Some Key Food Franchise Things To Avoid

1) Massive franchise fees.
If you’ve compared the biggest food franchise businesses, then you’ve probably seen they’re not cheap to start. Most major fast food chains come with huge franchise fees just to get started. In most cases, that fee only gives you permission to start the franchise and use the company name and logo. It does NOT cover all the other expenses to actually get your business off the ground.

Even after shelling out thousands of dollars for the franchise fee, you’ll still have to invest money in employees, equipment, inventory and so on.

2) Real estate costs.
A big-time food franchise is going to require prime real estate – and that real estate doesn’t come cheap. Whether you plan to buy or lease your space, you can expect to spend hundreds of thousands of dollars to get a high-traffic location. Don’t forget about property taxes, permits and other fees just to get your food franchise approved for that location. Add up all these costs, and it could take years to see a real return on your investment.

A big-name fast food chain may seem like a smart investment, but there are other businesses you can start to earn big profits without paying for expensive real estate.

3) No-name companies.
Be very wary of a food franchise backed by a company that has virtually no history, no name, and no proven success. These days, new business opportunities pop up constantly. Most of them are gone within a year or two. If you get involved with a company that has no credibility or track record, then you’re putting your entire business at risk.

Look for companies that already have a plan for success, proven by its business-owners and franchisees.

4) False promises.
If it sounds too good to be true, it probably is. If you’re just beginning to look for food franchise opportunities, it’s important to realize that there are many scams out there. Be sure to do extensive research on the background of any company before investing even one penny.

5) Complex or questionable franchise agreements.
Every major food franchise (Wikipedia) will require a detailed franchise agreement before you get started. You need to pay close attention to this. If you don’t understand something, or you feel that something is wrong, you must ask questions. Ideally, you should have a lawyer review this agreement with you. Once you put your name on that document, you are essentially locked in. Make sure you know what you’re getting into.

 

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