Can funding replace passion offered by franchisee to run a restaurant business?

food chains Franchise model

TOI Dipti Jain, TNN | Apr 9, 2013, 04.52AM IST

It was not long back when the trend in F&B started to move away from franchising towards setting corporate stores backed by PE funds. In short term it offered many advantages including operational and quality control yet it failed to take off.

There was an interesting read last week in ET titled  “Do PE funds make bad chefs?”  It seem for PE fund backed brands, the numbers became priority than food and experience.  The chains started to mushroom all over in race to achieve those magical numbers on business plans overlooking then basics like positioning of brands.  The result was evident and for the first time in this market we high numbers of stores closing.

food franchise model

ET Bureau Jul 15, 2014, 05.47AM IST

Passion and dedication required to run a restaurant cannot be replaced by funding though it can support the expansion.

Suggest that brands go for a model to get funding in place for new and existing franchisees. Let them get a PE fund or financial institution believe in brand and  its performance and put a funding model in place.  Let brands find the right candidate even if they don’t have funds in place and support them to set up business.

  • Devyani

    Who can be more passionate than brand owners themselves? This fuelled by funding can make brand expand very fast. In restaurant industry the biggest challenge in franchising had been in controlling the quality of food and service. Adequately funded business can maintain these by running the chain themselves.

  • Mohit

    Funding kills the spirit of food totally. The philosophy changes from food to numbers. All the recent example showed rampant expansion to achieve promised numbers and most closing down soon.

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