Common Franchise FAQs for Beginner Investors

The franchise world can seem a little complicated when you are on the outside looking in, but once you have all the right information and ask the right questions, you will feel a lot more comfortable navigating this new world.

Here are some common franchise FAQs for beginner investors:

What is a franchise?

A franchise is an agreement between two legally independent parties which allows a person or group of people (franchisee) to market a product or service using the trademark or trade name of another business (franchisor).

Chaps Pit Beef is a popular barbecue restaurant on the East Coast that is looking to expand its franchise program. Their take on the classic pit beef sandwich makes them a very unique opportunity for investors.

Do I have to pay a percentage of profits or revenue to company?

This is one of the most important franchise FAQs. Besides the initial franchise fee to get started, you will also typically have to pay royalties and advertising fees. The royalty fee is the regular fee the franchisee pays the franchisor for the right to sell their products or services. It is usually based on a percentage of the franchisee’s gross sales.

At Chaps Pit Beef, the licensing fee is $25k and royalties are 7% (6% + 1% for advertising) Start up costs vary depending on the location, square footage, equipment, etc. Chaps offers single store opportunities, as well as development agreements for territories.

Do I have to pay for advertising?

Some franchisors will offer you assistance with advertising and marketing. Many will even have national and regional campaigns that you can participate in. You need to ask any prospective franchisor directly how they handle advertising and marketing. Get a good idea of how much it will cost you a month and whether what they provide will be enough to help you attract new customers.

As a franchisee of Chaps Pit Beef, your advertising costs will come out of the royalty fees you will pay. The advantage of choosing Chaps is that you will get to be a part of a nationally-recognized brands known for delicious barbecue and quality customer service. As a franchisee, you will be invited to participate in any corporate advertising and promotion campaigns that run, which will help to boost your own marketing efforts.

Do I have to pay for store setup?

Your financial expectations as a franchisee and how much of the initial setup of your location you will have to do alone are of course two big concerns. In most cases, setup costs will be a part of your initial fees and most franchisors will help you select your site and equip it for your grand opening, but you should always ask directly so there are no surprises.

Chaps includes setup costs in their initial fees and makes sure their franchisees have all the support they need throughout the whole process. Chaps designed its second location in Aberdeen, Maryland as its first prototypical BBQ franchise unit so they could map out for their franchisees every little nuance of designing the ideal Chaps location. As a franchisee of Chap’s, you will have access to all the site selection and layout specifications as well as a list of all the equipment you will need for your franchise unit.

What store design options are available?

Again, this will vary depending on the franchisor and what is needed depending on the products and services you will be providing. Make sure any prospective franchisor you are interested in gives you a clear idea of what your options will be as their franchisee.

At Chaps, standalone and in-line retail formats are available for BBQ franchise opportunities. Shopping malls, strip malls, casinos, stadiums and universities are all prime spots for our food retail locations, as they lend themselves to areas with frequent foot traffic. The optimal store size of a typical Chaps Pit Beef location is between 1,000 and 1,200 square feet. As the brand continues to develop, we’ve grown to accommodate additional settings, as well, including the following:

  • Shopping malls: 600-800 sq. ft.
  • Strip malls: 1,200-1,800 sq. ft.
  • Casinos: 800-1,000 sq. ft.
  • Stadiums: 1,000+ sq. ft.

How much training can I expect?

All franchisors give some training to their new franchisees, but it tends to vary across the board. If this is your first time owning a business, then you especially will want a lot of support up front. Ask the franchisees what type of training they had, how long it lasted and if they are given a mentor they can reach out to when they have questions. Ask them to be honest on whether they felt the training was effective or not and if they thought there was enough training.

At Chap’s, the corporate team will provide initial training for your general manager and employees as well as continuous onsite training as need. They will also help you will all aspects of your grand opening. They even give regular inspections of your unit to ensure that you are getting all the resources and support you need.

Will there be a lot of rules and regulations to follow?

You probably also have a lot of questions about the daily operations of your franchise units and how many rules and regulations you will have to follow and how much free reign you will have. All franchisors will expect their franchisees to follow certain rules to keep some unity between all the locations so expect that certain aspects of the menu and look of the store will already be predetermined for you.

You will find that some franchisors will want to dictate pretty much everything while others will give you some freedom for your own creativity and innovation. It is always a good idea to talk to current franchisees to get the scoop of management practices and how they affect individual units.

At Chaps, you will be given a confidential operations manual that has all the best practices garnered through years of fine-tuning the running of their restaurant. They will answer all your franchise questions.

Chaps Pit Beef is one of the top franchise to buy. For more franchise FAQs, and information about investing in a franchise and the opportunities at Chaps, call Chaps Pit Beef today.

Leave a Reply