6 Giant Red Flags of a Bad Franchise Restaurant Opportunity

When you're researching a restaurant franchise, be on the lookout for these major red flags.

Restaurant Red Flags

So you’re looking for the best franchise restaurant opportunities in America and you’re sitting down to research which restaurant franchises are the most profitable, have the best support, and how much franchise owners are really making. It can be overwhelming to weigh all of the data that some organizations put out there, or it can be extremely underwhelming by how little others share. We’re biased. We believe we are the best restaurant franchise opportunity in the United States, but we also like to help. No matter which organization you’re looking at, you should keep an eye out for some red flags. There are plenty, but here are some of the most important warning signs of a bad restaurant franchise to buy.

RED FLAG #1: A Lack of Commitment to Marketing

Ask this question: How does the franchise support the brand building in a new market?

If the franchise doesn’t require marketing spend and aren’t contributing to a marketing fund themselves, that’s a bad sign. The best franchise leaders are like a coach that gives the players on the field the strategy and guidance they need to win games. At Big Whiskey’s, we’re like Phil Jackson. If you’re Michael Jordan, we’re gonna let you handle the rock, but we’re gonna get you into that iso at the elbow you love with some screens and motion. We’re gonna put you in a position to soar through the lane for a free throw line dunk with a marketing fund from day one and options for you to go as far as you want with marketing support, cutting edge techniques and the tools needed to win rings.

RED FLAG #2: Franchisee Training is an Afterthought

Ask these question: Does the brand offer a full training program for NSO and ongoing training? Is the training updated frequently and digitally accessible?

Everybody needs a Mr. Miyagi. If the franchise you’re looking at doesn’t show you how to wax on, how are you supposed to crane kick the competition when you’re out there by yourself? Training is vital to starting out right and building a long term brand with your franchise restaurant. It also changes faster than the weather, so training needs to evolve with the industry or it’ll be irrelevant. At Big Whiskey’s, we’re committed to sharpening our franchisees knives all the time with black belt level training.

RED FLAG #3: No Dedicated Franchise Liaison

Ask this question: Does the brand have someone dedicated solely to franchise success

If your first interaction with a franchisor feels like being on hold with an insurance company, run very quickly in the opposite direction. Or at least power walk away. A dedicated franchise liaison should be offering ongoing financial evaluation and support. They should be a thought partner to ensure you’re headed in the right direction. They should be a resource for operations and a friendly confidant for the tricky parts of running a restaurant, not a guy in cubicle who’s already thinking about golf on the weekend.

RED FLAG #4: Sh%#y Technology

Ask this question: Does the brand feature updated technology systems for staff, management and guests?

Our Founder Paul Sundy says “Ten years ago you didn’t have to be in technology business to be in the restaurant business. Now you HAVE to.” If a franchisor hasn’t made significant investments into their tech stack, that might be more than just one red flag. It might be a red flag factory that does nothing but produce huge red flags all day. We vet our tech partners just as seriously as we vet the suppliers whose food we put on tables. It’s that important to our organization.

RED FLAG #5: No Loyalty Program

Ask this question: Why the hell don’t you have a loyalty program?

In 2022 restaurants thrive with loyalty programs. According to Forbes Magazine, 71% of consumers says loyalty programs are a valuable part of their relationships with brands. 75% of consumers say they’re more likely to make additional purchases after being offered an incentive. Being able to talk to your guests 1:1 while offering them value is critical. A great loyalty program will increase repeat visits and ticket averages, hands down.

RED FLAG #6: Ground Up Only Buildings

Ask this question: What are the build out options you offer?

If a franchise locks you into a ground up only build, you have to question their expectations. Having a space that’s designed exactly the way you want is awesome, but it’s also the most expensive option. It can take years to make that investment back, limiting your ability to achieve the income you’re seeking. We have a flexible footprint and proven success in free standing, in-line and ground up builds so we can be very flexible on the real estate selection and construction costs for our franchisees. At Big Whiskey’s, we have a franchisee who renovated an existing end cap in a multi unit building for under $300,000 and was able to make his money back in 18 months. We will work with you to find the right option at the right time, and we have the track record to back it up.

If you’re looking for the best franchise restaurant opportunities in America, check us out. We live and breathe to make our franchisees shine. At the end of the day we value our relationships with them above anything else. If they have what they need to succeed, they will. And if they succeed, we all see flags, but they’re not red.

We like the checkered ones.

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