Franchise Your Food Truck Business - dummies

Franchise Your Food Truck Business

By Richard Myrick

Do you think your food truck business is unique? Are your friends, family, and, most importantly, your customers telling you that you should franchise your truck?

In general, franchising means the opening of additional trucks through the sale of franchise rights to independent investors (franchisees) who will use your name and business model. The franchisee pays you (the franchisor) an initial franchise fee in return for the rights to open and operate a food truck under your franchise trademark and menu and for training in how to operate the business.

After the start-up period, franchisees may also pay you an ongoing royalty fee (4 to 8 percent of sales) for your continued support and training in advertising, marketing, kitchen guidance, and financial and other services.

Although not entirely accepted by many in the food truck industry (because they feel that the mobile food industry is based on single, solo food trucks, each with their own personal branding and concept), some culinary entrepreneurs are finding that franchising is a way to quickly expand their food truck business with minimal capital and risk.

Franchising offers you a number of advantages over other expansion strategies:

  • Your business expands by using someone else’s money; a franchisee furnishes all the capital required to start the business.

  • Franchisees are responsible for all hiring, leasing, and opening expenses, thus reducing your risk.

  • Franchises can open quickly, often getting a new concept out ahead of the competition.

  • A franchisee assumes the risk of ultimately succeeding or failing.

Some of the disadvantages of franchising include the following:

  • Franchising is a regulated industry. You need to develop and operate your franchise system to satisfy federal and state franchise laws.

  • To set up a franchise around your food truck business, you need to invest time and capital, which goes toward regulatory compliance, attorney fees, and the creation of the systems and programs to be provided to franchisees.

  • After you franchise your business, your role changes from business operator to franchisor. This role change requires the management of your franchise system, respecting franchise sales, advertising, product development, and service development, which takes you away from the day-to-day operations of your own food truck.

To find out more about franchising your business, contact an attorney who specializes in this area. Depending on where your investors plan to operate a franchise, the attorney needs to be knowledgeable of both state and federal guidelines relating to this issue.