With the growing popularity of the neighborhood bar and grill, investors are considering the Applebee’s franchises for sale around the world as a safe place for them to invest and be able to expect a good return on their money.
However you can really expect your pocket book to take a hefty hit when signing on the dotted line. Here are some pros and cons you can consider when looking into the Applebee’s franchise opportunity.
- You have an already popular, well marketed in demand service at your hands. There is no question that you will get business.
- The service offered is timeless and will never go out of style. People must eat, and with the tradition of dinner at home with the family disintegrating, business will only continue to grow.
- Each store is tailored to fit your local community making it more appealing for your customers. Local sports teams memorabilia is displayed giving a comfortable home like feel to it.
- You will receive tons of support and training from the company in building and running your franchise. They have a good name that they need to keep, and they will do whatever they need to do for their franchisees to ensure that their image is not compromised.
- Initial Investments are Extremely High: Unrealistic for most people. The fee for the Applebee’s franchises for sale are currently $40,000 fee per restaurant. But that is just the beginning. The company usually requires that a franchise owner develops and operates a certain minimum number of restaurants in a specific area within a period of three to seven years. This means that prospective franchisees must have a pretty substantial net worth and a lot of cash available as well. They typically require a minimum $1,000,000 net worth for each restaurant scheduled under their multiple unit development agreement with other minimum requirements for liquid/cash assets on top of that. Do the math, if you are looking to invest in a fairly small multi unit franchise of 4 restaurants, you would have to have a net worth of well over $5,000,000.
- Royalty Fees: This could be considered a pro or a con depending on how you choose to look at it. Royalty fees are 4% on gross sales for the first two years. After that, the company has the right to increase the royalty fees to up to 5%. So on a hypothetical $1,000,000 in gross sales, you are due to pay a minimum of $40,000. However, on average franchise royalty fees are 6.7% according to the IFA as of 2006. So on the bright side you would only be paying $40,000 instead of $67,000. The extra $27,000 saved could help out in taking care of some of your other massive overhead.
- Advertising Fees: You are required as a franchisee to spend no less than 3.5% of total gross sales on advertising, marketing and publicity. You are also required to give 0.5% to Applebee’s for a marketing fund that goes to creative development.
- Competition is Rough: Though Applebee’s is a popular eatery, there are many other restaurants that offer food that is similar in price and quality. You aren’t necessarily cornering the market. They do have a great variety in what they serve, but its all pretty general cuisine and is served at many restaurants with only minor variations in preparation and ingredients.
If you are seriously considering one of Applebee’s franchises for sale, congratulations! It would be a great opportunity for the right person. But I do suggest doing your research and checking out all of your options before investing. There are tons of other franchise opportunities out there that will be successful and possibly at a much lower cost. There are so many options to consider, you really need to pick through all of them before you make any decisions.
Source by Jeremiah Tyson