Selecting the Ideal Location for a Canadian Restaurant Franchise
Location, Location, Location:
The old real estate adage of “location, location, location” still holds true in today’s market, and is one of the most crucial aspects to focus on when opening any new business, including a franchised restaurant. Finding the perfect location is easier said than done, especially if you don’t have a background in developing properties for various commercial purposes.
Is Amazon Killing Brick and Mortar?
Although the “Amazons” of the online marketplaces are becoming more successful everyday, the reality is that 94% of all retail sales are still conducted in physical locations. These online transaction trends are having a stronger impact on some industries more than others and luckily for those of us in the restaurant industry, consumers are eating out more than ever.
In Canada, the amount spent at restaurants has increased for 25 years straight, even during periods where the entire economy has struggled, such as 2008. The restaurant industry's growth has been double the rate of inflation, and shows no signs of slowing down as North America has fully adopted a culture where eating outside of the home is a “norm”.
Who is Your Customer?
Just like any business, when you begin to consider locations for your franchised restaurant, the first thing you need to do is fully understand who your target customer is. One of the greatest benefits of becoming a franchisee, especially with the Joey’s Group, is that you gain invaluable data, training and advice from “head office”. In the case of Joey’s, our typical customer enjoys “fast casual dining”, where they don’t receive full table service, but they do demand a higher quality of food and typically look to avoid high quantities of processed or frozen ingredients. These customers favour freshness and appreciate contemporary space designs.
Regardless of the style of restaurant, it is paramount to understand what your target customers enjoy, where they like to spend their time, what their spending habits are, and where they live and work. If you understand these fundamental data points, you can then narrow down your location search to capitalize on the wants and needs of your ideal client.
Remember, you cannot succeed as a brick and mortar style business unless you are physically in the location where the right customers can walk into your business and consume your offering.
Cheaper is Not Always Better
Being financially savvy and controlling your spending are two great pathways that can lead to a successful and profitable franchise. However, when you are selecting a location, you must proceed cautiously and ensure that you are spending enough to secure a property that will bring you immediate and long term success. It may be tempting to take a risk on a cheaper building that is “past it’s prime” or on a location that is slightly off the beaten path, opposed to an ideal location in a developed, busy area.
Many believe that if they perfect their operations and advertise effectively, the customers will come to them! Sadly, this strategy is rarely successful.
Analyze Competition
Instead, start by investigating some of your competitors in town. Take note of how busy they are, during all months of the year. Have they been around for a long time? Is there further development taking place nearby to these locations? If you have a very busy competitor, that has been popular for quite some time, in an area that is continuing to grow, you may have discovered the ideal location to place your franchise.
If you find an area that is extremely popular, with high amounts of consumer traffic, it is important to ensure that the customers in that area fit the description of your target customers. For example, a certain location may be extremely busy, but the majority of consumers there are visiting McDonalds, Burger King, and a discount grocery store. We have already determined that a Joey’s customer likely avoids large amounts of processed foods, so if they favor fast food chains, they may not be a great fit for your future restaurant. This is a great lesson to learn when analyzing traffic. Plentiful foot traffic does not necessarily translate into a concentration of consumers that will purchase your offering.
On the other hand, if an area has another “fast casual restaurant” that is bustling all year long, this is a great indicator that a restaurant like Joey’s might flourish here. One fast casual restaurant that is consistently at capacity is a great sign, however if there are already three or four restaurants of this style in the area, the local market could be saturated and may not bring long term success.
Additional Considerations with Location
If you are narrowing in on a potential location, it’s a great idea to spend some time pounding the pavement in the surrounding area and get a feel for the neighbourhood. Is it easy for customers that are driving by to navigate into your location? Is parking a major concern? Are there any additional activities or festivals that happen in the area that could add or pull traffic from your business?
Again, this is where the experiences of a great franchise group can make the difference. Many of our owners and managers have been through all the situations and experiences you may be trying to visualize. A few strategic questions sent their way can be the difference of a flawless grand opening or a franchise that never gets off the ground.
Have a location in mind that you believe would be perfect to create the next Joey’s Restaurant or Joey’s Urban? Contact our franchise team today and ask for your free information package that will outline exactly what your future as a franchise owner may look like!
ALL IN!
I have a friend who uses this motto, literally religiously. So when I saw a posting about being ALL IN on Linkedin I thought it would be appropriate to use my friend Michael Chiasson as my inspiration for today’s blog. Check out his amazing story here All Access Ministries.
Franchising to franchisors is about consistency in the brand and product but its also about finding that franchisee that is ALL IN. It is hard to see success as a franchisee if you believe the franchise is the only reason people come in. Franchises drive the brand and the product, the franchisee drives the service and the atmosphere and if you are ALL In, your guest see it, hear it and support it!
At JFG were are ALL IN in supporting our partners and their success. How about you? Are you ALL IN?
Sustainability
At Joey's Franchise Group we are doing what we can to mitigate our impact on fisheries and ultimately our environment. Our brands Joey's Restaurants and Joey's Urban have teamed up with Ocean Wise, a Vancouver Aquarium Conservation Program, to ensure that we're on the right path to sustainability. Check it out here; Ocean Wise and Joey's
13 Things to Consider when Buying a Franchise in Canada
Great Article by;
Tony Wilson
Special to The Globe and Mail
Published Tuesday, Sep. 09 2014, 5:00 AM EDT
Last updated Tuesday, Sep. 09 2014, 8:30 AM EDT
1. What’s a franchise? A franchise is essentially a licence to operate the franchisor’s business system and use its trademark according to the franchisor’s standards. The term is normally for between 5 and ten years, depending on the agreement and the lease. In exchange for the right to carry on business under the franchisor’s trademark and system, the franchisee usually pays the franchisor an initial fee for these rights (somewhere between $15,000 and $100,000), and an ongoing royalty linked to the gross sales of the franchised outlet (between 5 per cent and 8 per cent of gross sales). There’s usually a requirement for the franchisee to make regular contributions to a regional or national advertising fund as well (between 1 per cent and 4 per cent of gross sales), so that the franchisor can advertise the brand in high-cost media using the contributions of all franchisees. If it’s a bricks and mortar business, the franchisee either constructs and develops the premises itself (at its cost) or can buy the constructed premises on a ‘turnkey’ basis from the franchisor.
Franchisors are essentially selling three things: the value of a (hopefully) recognizable trademark and brand; the know-how associated with the franchisor’s business system (and the franchisor being able to teach that know-how to the franchisee); and the lower unit costs that come from the purchasing power of a large buying group
2. You’re not buying the business system, you’re renting it. You’re simply acquiring the rights to use a franchisor’s business system, trademark and ‘know-how’ for 5 or ten years, depending on the term of the franchise and any renewal rights contained in the franchise agreement. Think of it like a lease. You’re ‘renting’ the franchisor’s business system and brand for a time, and when that time is up, it’s over. Those rights revert back to the franchisor, who can sell those rights to someone else
3. Renewal and assignment rights are not automatic. Virtually all franchise agreements allow for the right to renew for at least one term, and permit the franchisee to assign the contract. But there are always conditions (and fees) that go along with the exercise of renewal and assignment rights. If you don’t meet those conditions, you wont be able to renew or assign.
4. Critically assess the FDD and all financial and other information given to you. Franchisors awarding franchises in Alberta, Ontario, Manitoba, New Brunswick and PEI are required by law to provide a FDD to prospective franchisees at least 14 days before the franchisee signs any agreement relating to the franchise or pays any money (this differs slightly depending on the province).
The FDD is required to contain all material facts relating to the franchise investment, and there are very serious legal remedies available to franchisees if the franchisor fails to comply with its disclosure obligations. Read the FDD and the documents attached to it carefully with your lawyer and financial advisor. Remember that although these documents will assist you in assessing the nature of the investment, they’re always written for the franchisor’s benefit, and will be crafted to put the franchisor and the franchise system in the best light possible, even when there are lawsuits and other problems facing the franchisor. Also appreciate that if you are in B.C., Saskatchewan, Nova Scotia, Newfoundland and Quebec, there is no legal obligation for a franchisor to provide you with its FDD, and no statutory remedies available to you in the event the franchisor fails to disclose a material fact relating to the franchise as in Ontario, Alberta and the other ‘disclosure provinces.’
5. Be careful of U.S. franchise agreements that have not been adapted to Canadian laws. Sometimes U.S.-based franchisors forget that Canada is a separate country. They don’t modify their agreements to suit Canadian laws. In particular, a U.S. franchisor may not have contemplated the effect of Canadian withholdings tax, something I’ve written about before and which could cost you additional money if not dealt with at the outset of the arrangement.
6. Don’t get sidetracked negotiating the boilerplate. Franchisors pay their lawyers lots of money to draft standard, solid and enforceable franchise agreements that they can use with all their franchisees with little or no amendments. The franchisee lawyer that sends the franchisor a 25-page list of changes to the franchisor’s agreement is arguably unfamiliar with the norms of the franchising relationship. Part of the lawyer’s job is to know what’s ‘normal’ and what’s not; what’s negotiable and what’s not.
7. If you can, avoid entering a franchise agreement where both you and your spouse have to guarantee the contract. It only means the franchisor has two of you to sue if the business fails. If at all possible, limit your exposure so that only one of you assumes all the risk. You might also consider capping any personal guarantee to a maximum amount.
8. Trademarks. Does the franchisor own or control the trademark? (The Canadian Intellectual Property Office has a search engine that allows you to check trademark applications and registrations here)
9. Pricing for products. What assurances are there that the products for sale by the franchisor can be bought by the franchisee at competitive prices? What if the products for sale have to be shipped from another part of the country, or another country? Have you factored in freight costs and duty? A 91-cent dollar can create problems for Canadian franchisees who may be required to buy products from the U.S. in U.S. dollars and pay royalties and other fees in U.S. dollars.
10. Exclusive territory. Are you getting an exclusive territory as part of the deal? Can it be lost or reduced?
11. Don’t forget to talk to other franchisees in the system. Even if they’re in other parts of the country thousands of miles away, their input is invaluable. And if they are reluctant to speak with a stranger out of the blue, ask these three questions: Are you happy? Are you making any money? Would you do it again?
12. If the franchisor is not a member of the Canadian Franchise Association (CFA), ask ‘why not?’ The CFA is the only association of franchisors and service providers in the franchise industry in Canada. It has extensive rules on ethical franchising and advises prospective franchisees to investigate before investing. If the franchisor isn’t a member, why not?
13. Don’t let your expectations get away from you. Finally, like any other investment, acquiring a franchise involves a high degree of risk. Some franchises work out very well for the franchisees. And some do not. Do not sell the concept to yourself. Be prepared to walk away.
Joey’s Franchise Group has a franchise that fits your needs and these rules. Call Rob Hilditch at 1-800-661-2123 for more details.
Tony Wilson is a franchising, licensing and intellectual property lawyer at Boughton Law Corp. in Vancouver, he is an adjunct professor at Simon Fraser University (SFU), and he is the author of two books: Manage Your Online Reputation, and Buying a Franchise in Canada. His opinions do not reflect those of the Law Society of British Columbia, SFU or any other organization.
Original Link:
http://www.theglobeandmail.com/report-on-business/small-business/sb-growth/day-to-day/thirteen-things-to-consider-before-buying-a-franchise-in-canada/article20471510/
New Growth - Joeys Franchise Group
The great thing about franchising is bringing on new stores. It is such an exciting time for both the Franchise Partner and the Franchisor. We are excited to announce a few new store openings in Calgary. Two new Joeys Urban’s, one at 8118 Beddington Blvd. NW and one at 4501 17th Avenue SE . We also have a new MVP Modern Barbers in Calgary this week at 34 Edgedale Drive NW, in the community of Edgemont across from the World Health Centre.
Join us as part of one of our great franchise systems; Joeys Urban, Joeys Restaurants , MVP Modern Barbers, Homes & Land Canada
Financing for Franchises
Did you know that most financial institutions have franchise financing programs and that typically your best chance of success and best rate is usually with your current institution. When researching your financing options, start with your local bank that your already hold accounts with. They will be able do give your the best terms and service. Using other lenders can lead to higher rates and shorter terms unless you use institutions that have franchise specific programs. If your local institution can’t provide you with satisfactory terms, look to the institutions below. We recommend their programs regularly and have great success with our franchise partners using them. They’ll not only help you get the financing you need but also review the franchise business model you are considering and give you advice on them.
TD Canada Trust Franchise Financing
Scotia Bank Franchise Financing
Success in the restaurant business...
Success in the restaurant business can be elusive. What’s more, success means different things to different people. Some operators want to just make a living. Others have loftier goals – maximization of market share, achievement of targeted return on investment and so on. Regardless of one’s definition of success, the basics in the restaurant industry never change.
Here are the top 10 factors that contribute to success in our industry:
• Validated concept definition. Can you clearly state what experience your restaurant offers, what products it serves and what service-style it employs? If not, you’re not sure what your restaurant is all about and neither are your customers.
• Understanding your restaurant’s demand types and sources. Is your demand destination, generative or impulse? What is your trade area?
• Location. Regardless of your restaurant’s types and sources of demand, customers must be able to find and access your restaurant easily.
• Differentiated brand imagery. What makes you stand out from your competition?
• Targeted value proposition. Consumers are more knowledgeable and more demanding than ever. Value means offering the choices, convenience and monetary satisfaction at whatever price point the consumer selects.
• Targeted marketing. Make sure your marketing focuses on your trade area, your customer demographics and their buying behaviours. Find ways to measure the success of each marketing program.
• Quality food. You’re only as successful as you last meal.
• Quality service. You’re only as good as your last customer interaction. Do you talk about good service or does everyone in your organization understand it and live it?
• Flawless execution. Do all the elements of the experience you expect to provide to your customers come together every hour of every day? How do you know? Do you take action to make sure that they do?
• Customer data. Do you really know your customers – their demographic profile, their needs, their wants, their expectations
Joey’s Urban | Joey’s Restaurants | MVP Modern Barbers | Homes & Land Magazine
Hospitality.....
Ultimately, hospitality is your competitive edge. Don’t confuse that with providing good service — you can give good service and still have people leave feeling un-cared for.
True hospitality doesn’t come from what you DO, it is a result of how you ARE. This creates a training dilemma. How do you help people learn to BE different? For that matter, how do YOU learn to be different?
The truth is that you don’t learn it as much as you allow it to blossom from the inside. It is a wonderfully natural — and totally painless — process of seeing life from a different direction. A Place of Hospitality is designed to help you move in that direction … and help you stay in that place once you have found it.
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.” – Donald A. Adams
It all starts with…….you!
Avoiding franchise remorse...
Much like the picture attached, ask yourself, what makes you feel good. The best feeling in the world, is knowing you made the right decision and having no remorse in it.
At Joey’s Franchise Group, we believe in making our Franchise Partners feel good by ensuring they feel happy about their decision to choose one of our Franchise concepts.
Evidence of support tends to nurture trust and builds group resilience. It is typically sought by people in three primary forms:
• Consistent Leadership Behavior
• Regular Feedback
• Adequate Resources
Without sufficient or appropriate forms of support, individuals and the groups they belong to, tend to fuel their own anxiety and stress. This is counterproductive which in turn hampers trust and performance of all kinds.
In business almost any action we take is dependent on support of others, and approval either before or after the fact. In contrast to criticism and complaint, expressions of approval and support do have long shelf-lives.
Our support system of our Franchise Partners is integral to their and our success. It allows them to feel great about their decision.
Rob Hilditch, VP of Business Development
Joey’s Franchise Group – Great Canadian Franchises
