Expense Control


Be prepared: Here are the top-five extra business expenses

you are likely to encounter after buying a restaurant franchise.

By Stephen Sheinbaum

One of the benefits of buying a restaurant franchise over starting an eatery from scratch is that many of the initial costs that you will face have already been planned out. However, once the menus are printed, the doors are open and your business begins to grow, other expenses that were not in the initial plan will begin to appear. From my experience of funding franchisees over the last decade, there are five areas where extra expenses can pop up:

1. Updating and Replacing Equipment

Restaurant equipment takes a lot of wear and tear; too much sometimes. As a restaurant owner you must think about how you will handle it when your oven stops heating or your walk-in stops cooling. Thorough cleaning and regular maintenance can, of course, go a long way towards preventing these problems, so make sure every piece of equipment is on a check-up schedule.

There are other options too. For example, many restaurant owners choose to lease equipment rather than buy it because leased equipment often comes with built-in maintenance. If, despite your best efforts, something does break, know your options for finding a replacement quickly.

2. Professional Services

Many restaurant owners feel more comfortable with front-of-the-house operations over record-keeping and management tasks. Many franchisors build their own computerized systems to help with those tasks. A sandwich franchise’s inventory system will, for example, track how many sandwiches a vendor gets from a cold cuts delivery.

If your franchisor hasn’t done this – or if you need more help with bookkeeping, accounting and the like – make a budget for extra professional services. If your franchisor has a partnership with service software – and many do – take advantage of it.

3. Extra Marketing

Big franchisors do a lot of heavy lifting for their operators when it comes to marketing, like spending big on print and digital media advertising. These campaigns may not go all the way down to the local level where you operate, so you will need to close the gap.

Be smart with your marketing spend and identify the best ways to reach your audience. Will you get more bang for your buck if you include an ad in the local newspaper than support a local sports team or school play? Your marketing spend can accentuate the highs and smooth out some of the lows, if planned correctly.

4. Legal Costs

We live in a litigious world and you need to be prepared for it. Here, too, prevention can go a long way. Make sure that your employees are properly trained to clean up any messes that could cause slips or falls and make sure that you follow all applicable laws regarding hiring and management. Know what legal costs are and aren’t covered under your franchise agreement, and take time to attend business networking events in your area where you might be able to get to know local attorneys.

5. Upgrades

As franchise systems grow, they often make changes to their branding and outlet designs that can leave you with unplanned expenses. Do you have the capital in reserve for signage changes or extra equipment that might be needed for a new menu?

The big expenses that can come with a big upgrade can be good candidates for long-term financing – including loans guaranteed by the U.S. Small Business Administration. An application for long-term funding will often need to be supported by financial records and projections, so be sure to work with your accountant to have those documents ready.

Stephen Sheinbaum is the founder of Bizfi, an aggregation marketplace that offers many kinds of alternative funding, from short-term finance to longer-term loans, equipment finance and lines of credit.


Contact Us

Franchising Today

Cringleford Business Centre
Intwood Road
Cringleford, Norwich, UK

Click here for a full list of contacts.

Back To Top