Pricing and Costs of Restaurant Chains

The pricing and costs of restaurant chains can vary dramatically so choose accordingly
By Sherril Steele-Carlin, Freelance Writer You can find franchise restaurants chains for sale all over the Internet, but a lot of those franchise "help" sites don't tell you what you need to know most when you purchase restaurant chains. How much is it going to cost you in the end? Besides chain start-up costs, there are ongoing charges for a variety of things, from royalties to advertising co-ops, and you need to know what to expect up front.
 

Don't sign on the dotted line for your national restaurant chains until you know about all the costs you'll owe. Ask yourself the following questions:

1. What are the total costs, both up front and each year for your restaurant franchise opportunity?

2. Should you take out a mortgage or other financing for your restaurant chain purchase?

3. Should you invest in regional restaurant chains to save money?

Know your total costs before you choose the right food franchise opportunities

Look for franchising information that's more than hype; it should have concrete information on everything from what net worth the franchise requires of owners to what ongoing royalties and advertising fees you pay every year. Take the guesswork out of buying food and restaurant chains by looking for information in one, easy to read source rather than seeking out individual corporate websites.
Try: Check out sites like the World Franchising Network, which rates the top 100 franchises in many categories, and offers comprehensive franchise information for restaurant chains worldwide. America's Best Franchises offers comprehensive investments and costs and allows you to search for franchises by what you can afford to invest.

Think hard about taking out a mortgage to finance your restaurant franchise

Most viable national restaurant chains will offer some help with financing when you decide on a chain restaurant opportunity. However, you'll still have to finance a large portion of the purchase price yourself. Opening any kind of new business can be a risk, and enhancing that risk with a mortgage on existing property can be dangerous. You need to include the interest you'll pay in the cost of the franchise, so look for ways to get the lowest interest rate.
Try: Advanced Restaurant Finance offers financing for existing restaurants and new franchises. Richard Parker of the Diomo Corporation advocates learning all you can about restaurant financing and looking at seller or other options, like the Small Business Administration.

Locate regional restaurant chains that may be cheaper to purchase than national chains

If you can find local or regional restaurant franchise opportunities, you may be able to save money on franchise fees and other costs and still have a brand name that's well known and respected in your area of the country. Smaller, regional franchises often don't require as large an investment as national franchises and their ongoing costs. Things like royalties are often cheaper, too.
Try: Visit Business Franchise World to locate smaller franchises geared to your particular area and budget. Franchise Buyers Network also allows you to choose regional franchises by your area and amount you're willing to invest.

• Don't bite off more than you can chew when you think about buying chain food restaurants. Look for the right fees, financing and ongoing costs that won't stretch your budget at the beginning. Remember, it takes most chain restaurants months and even years to establish their business, so make sure you have your financing in place and you have enough collateral to withstand the rigors of staring up your restaurant franchise.