Franchise FreshLine, Restaurants closing, franchising in Ukraine
Let’s review the causes of closing the FreshLine Franchise in Kharkiv and Kyiv, and make a brief analysis of its Brand.
Why, buying a franchise, a well-known brand, as you can see a ready-made concept with streamlined business standards and strong marketing, does not guarantee 100% success in obtaining the desired profit?
Restaurateurs in the restaurant business and managers at Proriat Hospitality Partners say that working through a franchise can be very beneficial and profitable, but you need to understand all the nuances of each brand and rationally assess the potential of the location with your intentions in the development of the establishment.
What is Franchising?
Let us recall that this is a business format of work that involves the sale of rights to use a trademark, and the obligation of the franchisee (partner) to follow the franchisor’s license agreement. In most cases, you cannot organize your own production, add any products to the offerings of your venue as long as it holds a brand name that does not belong to you. You will have to manage the restaurant yourself.
We can confidently say that a ready-made business model makes it easier to start opening a restaurant, but you need to understand that you will need to pay for this advantage as long as your establishment exists. Even, the minimum royalties in Ukraine of 3% are monthly payments on average 25,000 hryvnias, excluding marketing. That is, $10,000 per year will be your expense. Let’s add a lump-sum fee of $5.000 – $20.000 Total: $15.000 – $30.000 expenses for obtaining a ready-made solution in the first year of the partnership.
How long does it take to create your concept and what will be the cost?
You can get the answer to this question at Proriat Hospitality Partners, a team of experts in the restaurant business with over 10 years of experience and many completed projects. The company not only creates new concepts of f&b establishments but is engaged in their development and effective management. Competent management and a strong team are some of the main elements in achieving corporate goals, says Kyryll Ushakov, founder of the Proriat management company.
Why are franchise establishments being closed?
The answer is quite obvious, the gross profit (revenue) is not enough to cover the expenditure side, as a result, the institution becomes unprofitable. In such cases, the restaurateur is forced to close the project, and if the owner of the premises, who is also a franchisee, understands that it is more profitable to rent out his property and receive a passive income of at least 10% per year.
Favorable location with high pedestrian and transport traffic does not help FreshLine to survive.
After the closure of several restaurants in Kyiv, now there is only one open project in the capital city left. Recently, the brand left the premises in the central part of Kharkiv along the street, Sumskaya and a few months ago, the same fate was with the institutions in the area of the bus station, st. metro Holodnaya gora, and st. metro station Studenchiskay.
You can see a solid decline in the popularity of the FreshLine brand, which gives a clear signal to reformat the concept, otherwise, the company will be closed. As we can see, the sandwich restaurant chain is in no hurry to involve third-party management companies to help in finding new business solutions. They adhere to the main initial goal, the opening of new points in the city from which the application came.
How much does it cost to create an alternative concept for Subway (a brand that FreshLine is equal to)?
According to some restaurateurs, the budget for creating a similar brand can be on average $15,000 – $25,000; the implementation period is 3 – 6 months. It is necessary to form a working group to make a more correct calculation. Is there a risk? Yes, the risk is similar to opening a franchise establishment, only in case of a failure you have the opportunity to sell or lease your business, which in the case of a franchise partnership may not be possible. If you have any questions about the efficient use of your commercial premise, please contact Proriat Real Estate, a real estate agency that focuses only on Hospitality properties.
Should you buy a franchise?
To unequivocally answer this question, you need to conduct a detailed study of your city and the location of the premises. Analyze the competition and collect all the information on the desired franchise. Find out who will be in charge of launching the project, and who will ensure smooth management and guarantee the planned sales volume with the desired profitability.
Remember that 80% of the success of a project is determined even before any work begins. Therefore, if you are planning to start a business and open a restaurant or bar on a franchise or on your own, we recommend contacting a company that specializes in this segment. Managers will help you see moments and pitfalls that you did not even know about, thereby protecting you from making unwise decisions.
The restaurant business, like any other commercial activity, requires detailed planning and forecasting one, two, and three years in advance to ensure the desired result is obtained. You will need to form a team of professionals who love what they do and who can guarantee that you will complete all the necessary actions to achieve corporate goals. In the modern hotel and restaurant industry, this is a fairly popular practice and type of cooperation, when entrepreneurs attract competent project management organizations and maximize their profits.
Our team at Proriat is ready to tackle challenging tasks, search and generate ideas to create profitable solutions that provide stable profit and up to 20% ROI (return on investment).
We create, We optimize, We manage!
Become a partner and get results!