There are many different ways to become a business owner. Some options include starting your own venture from scratch, buying an existing business for sale, or franchising. With each alternative comes a list of pros and cons to consider. And for the purpose of this article, we will focus on running a franchise, more specifically, a bagel shop franchise.
From exotic pastries to breakfast necessities, bagels have become a popular food item in America for both breakfast and lunch. So much so, that bagel shops have been popping up from coast to coast for decades now and continue to grow as viable business ventures. And with the increase in personal disposable income, bagel shops — and the Coffee & Snack industry as a whole — have been thriving. In fact, this year’s industry revenue totals over $50 billion, with an annual growth rate of almost 5 percent.
So, is franchising the way to go when it comes to buying and operating a bagel shop? Keep reading as we review what’s it like being a franchisee in today’s hungry market.
Pros of Franchising
Franchises typically have lower-risks and higher success rates because you are buying a proven business model. Between recipes, marketing tactics, and supplier relationships, you are given the exact tools you need to run a thriving bagel shop. And what’s more, you are using a recognized and trusted name, which can help you instantly gain customers, loyalty, and a positive reputation.
And since you’re operating under a brand name, franchisors will make sure that you’re set up for success from the get go. Typically, a franchisor will offer support even before your bagel shop is open by helping scope out a location to rent, hiring employees, and applying for business loans. And once the business is open, the franchisor may stay a few weeks to help with the day-to-day operations and training to ensure you hit the ground running.
Cons of Franchising
Franchising also has its fair share of challenges. This tested and true alternative leaves little wiggle room for personal opinions nor creative freedom. Franchisors want their franchisees to stick to the proven business model for all decision-making, including marketing, hiring, firing, promoting, etc. This can be a real turn-off for certain entrepreneurs looking to be their own boss and run operations their way.
Plus, the start-up costs and franchising fees can add up quite quickly, depending on the brand. For example, the minimum initial investment required to get started with a Manhattan Bagel shop is $200,000, whereas Einstein Bros. Bagels has an initial franchise fee is $35,000 with start-up costs ranging anywhere between $535,000 to $825,000. So, be prepared to pay the price for choosing a safer investment.
Considerations for Franchising
Due diligence plays a major role in buying a franchise. It’s important that as a potential franchisee, you take the time to investigate all the below factors before signing any agreements:
- Health of the parent company: Find out how the overall bagel franchise is performing and compare it to industry averages. You want to make sure you’re investing in a profitable company with a promising future.
- Health of the sector: Research how bagel shops are performing in general. Are market trends in favor of or in opposition to bagel shops? It’s important to make sure the sector is worth investing in and that opportunities outweigh threats.
- The area: Conduct a PEST analysis to help determine the political, economic, social, and technological factors unique to that area. You want to be aware of any factors that could impact the success of your bagel shop.
- The competition: What is the competitive landscape? Make sure to account for both your direct (other bagel shops) and indirect (any business that sells food) competitors.
- The brand’s online presence: What are people talking about when you search the bagel shop franchise online? Take time to review online reviews, browse social media channels, and visit the company website. Remember, the brand’s online reputation will automatically become yours too.
- Other franchisees: By buying a franchise, you are buying into a shared name. It could be beneficial to visit other bagel shop franchisees operating under the same name to get a sense of your future business. Ask to speak with the business owners for the inside scoop.
Get expert advice
It could be very beneficial to hire an expert advisor, such as a business broker. A business broker can help alleviate a lot of the pressures associated with business transactions and franchising agreements. They will help find franchising opportunities, negotiate terms and prices, and fill out paperwork.
It's also important to get a good sense of all the businesses that are available in your area before settling on any one.
So, are you ready to be a franchisee? If so, we invite you to browse through the Businesses For Sale website for an extensive list of bagel shop franchise businesses currently for sale. What’s more, you can find industry insight, expert tips, and best practices to help keep your business running for years to come.