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Applebee’s Franchises For Sale – Should You Consider Something Else?
With the growing popularity of the neighborhood bar and grill, investors see Applebee franchises for sale around the world as a safe place to invest and can expect a good return on their money.
However, you can really expect your pocketbook to take a beating when signing on the dotted line. Here are some pros and cons that you can consider when considering the Applebee franchise opportunity.
- You have an already popular and well-marketed service in your hands. There is no doubt that you will get business.
- The service offered is timeless and will never go out of style. People have to eat, and with the tradition of dinner at home with the disintegration of the family, business will only grow.
- Each store is tailored to your local community, making it more appealing to your customers. Memorabilia from local sports teams are displayed, giving a cozy home feel.
- You will receive tons of support and training from the company in building and running your franchise. They have a good reputation that they need to maintain, 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 Applebee franchises for sale is currently $40,000 per restaurant. But this is only the beginning. The business generally requires a franchise owner to develop and operate a certain minimum number of restaurants in a specific area over a period of three to seven years. This means that potential franchisees must have a fairly large net worth and plenty of spare cash as well. They generally require a minimum net worth of $1,000,000 to each restaurant planned as part of their multi-unit development agreement with other minimum liquid/cash asset requirements on top of that. Do the math, if you are looking to invest in a fairly small 4-restaurant multi-unit franchise, you need to have a net worth of over $5,000,000.
- Royalties: This could be considered a plus or a minus depending on how you choose to watch it. Royalties are 4% on gross sales for the first two years. After that, the company has the right to increase royalties up to 5%. So, on a hypothetical gross turnover of $1,000,000, you must pay a minimum of $40,000. However, on average, franchise royalties are 6.7% according to IFA as of 2006. So on the bright side, you would only pay $40,000 instead of $67,000. The extra $27,000 saved could help you with some of your other massive overheads.
- Advertising costs: As a franchisee, you are required to spend at least 3.5% of your total gross sales on advertising, marketing and publicity. You must also donate 0.5% to Applebee for a marketing fund for creative development.
- The competition is tough: Although Applebee’s is a popular restaurant, many other restaurants offer similar dishes in price and quality. You don’t necessarily corner the market. They have a wide variety in what they serve, but it’s pretty general cuisine and it’s served in many restaurants with only minor variations in preparation and ingredients.
If you’re seriously considering selling one of Applebee’s franchises, congratulations! This would be a great opportunity for the right person. But I suggest doing your research and checking out all of your options before investing. There are tons of other franchise opportunities that will be successful and possibly at a much lower cost. There are so many options to consider, you really have to choose them before making a decision.
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