Ready to kickstart your business ownership dreams? Your hospitality expertise can set you up for success, but starting a company from scratch can be a high-risk venture. Here’s a hard truth:
20.4% of companies fail within their first year, and less than 35% survive the decade.
Investing in a franchise can offer a smoother path to entrepreneurship—one that can alleviate the unknowns and uncertainties involved in crafting a full-fledged business plan. However, building upon an established hospitality brand can introduce new limitations.
This article will provide key considerations to help you answer the question, “Should I buy a franchise in the hospitality industry?” We’ll also present a low-cost path to hospitality business ownership that can eliminate the downsides of brick-and-mortar franchises and building from the ground up.
When Does Buying a Hospitality Franchise Make Sense?
There’s a reason Starbucks and McDonald’s are always around the corner and Wyndham Hotels offers lodging wherever you go: they have proven blueprints for success. Franchisees can replicate profitability instead of experimenting with strategies and burning through dollars in the process.
You may lean toward franchising if you have a low risk tolerance and agree with any of these statements:
- You want a reliable business model. It can take years to fully refine hospitality operations. However, franchises already have proven playbooks for everything from employee onboarding and customer loyalty programs to pricing, workflows, and kitchen design.
- You want to build upon a trusted brand. Building a loyal customer base isn’t easy, but franchises provide recognizable brands that can attract guests before your location even opens. If you maintain the franchisor’s quality of service, you can benefit from their positive reputation.
- You want ongoing guidance and support. The best hospitality franchises regularly provide resources, including marketing materials and points of contact, so you’re never going it alone. Freddy’s Frozen Custard & Steakburgers, for instance, has developed an entire facility for franchisee and manager training.
When Does Starting a Business from Scratch Make Sense?
Hospitality franchises often place strict limitations around how you operate and promote your business—because what happens at your location reflects upon the franchise as a whole. You may lean toward starting an independent business if you’re passionate about rapid growth, an innovative idea, or any of these statements:
- You want full control over your operations. Most franchises have strict workflows and conduct regular audits to ensure compliance. Building your own business offers more control over what you sell and how you get things done.
- You have a specific vision for your brand. Want creative freedom? Independent restaurant owners have the flexibility to leverage any marketing channels, innovate without red tape, and fully differentiate their brand.
- You want to minimize long-term costs. Franchise royalty fees usually start at 4% of your revenue and can quickly stack up. If you want to keep all your profits to quickly grow and expand, you’ll need to start from the foundations.
Elevate the Benefits of Business Ownership with Gecko Hospitality
Investing in a franchise and building your own business are two profitable routes, but both present two core challenges. First, there’s the issue of poor work-life balance. Hotel and restaurant life, for instance, can come with long, unpredictable hours, and that doesn’t change when you’re the head honcho.
There’s also the challenge of a high initial investment. The median cost to open a restaurant is $375,000. While franchise fees may sound relatively low, you’ll still have to pay hundreds of thousands when accounting for real estate and configuration costs. Running a Taco Bell even requires a $5 million personal net worth.
So, how do you pursue entrepreneurship that’s connected to the field you love without experiencing these pitfalls? Consider investing in a franchise from Gecko Hospitality, the nation’s premier hospitality management recruitment firm. Leverage your industry expertise to drive connections between top talent and leading establishments. You’ll benefit from all the perks of franchises, plus:
- Low capital investment: No brick-and-mortar investments are required. We provide fully integrated, internet-based technology, so you can work remotely.
- Work-life balance: Take it from our franchisee Jeremy Nichols: “I love the flexibility in my schedule and having time to see my amazing daughter grow up.”
- Quick startup: Start your operations in as few as 30-45 days. Two weeks of thorough training in Fort Myers, FL are included to get you up to date on our cutting-edge strategies.
