May 31, 2022 - Blog, Franchise Articles by |

While local residents have always known Philadelphia as a food town (and while the city is renowned worldwide for its cheesesteaks), the city has only recently gained broader recognition as a gastronomy hub. This recognition has attracted several new franchised and independently-owned franchises over the past few years. If you are thinking about buying a restaurant franchise, here are three important considerations from Philadelphia franchise attorney Jeffrey M. Goldstein.

What To Know Before Buying a Restaurant Franchise in Philadelphia

1. More Recognition Means More Competition

As Philadelphia’s food scene grows, competition is ramping up as well. Potential customers have more options than ever, and this means that restaurants need to do more to get customers in their dining rooms. As a franchisee, you will have costs (i.e., royalties and advertising fund contributions) that you wouldn’t have as an independent business owner, and you will need to keep this in mind when building your business plan and assessing your chances of success.

2. You Need to Make Sure You Know Your Territorial Rights

Let’s say you are the first franchisee in a system to open a restaurant in Philadelphia. You spend your first two years building a loyal customer base, and you get to the point that you are serving a capacity crowd on a regular basis.

Then, another restaurant opens a mile away. All of a sudden, all of the customers who live on the other side of the city can get the same food and the same ambiance without traveling as far. Your sales drop significantly. Why did this happen? Because you didn’t negotiate an adequate protected territory.

Franchise territories vary widely in terms of their scope and the protection they offer. While some franchise territories are truly exclusive, some form of limited “protection” is more common, and some territories simply limit where franchisees can advertise. When reviewing and negotiating your franchise agreement, it will be vitally important to make sure you know what territorial rights you are getting.

3. Franchises Appeal to Some Diners, But Not Others

While some customers like to eat at franchises because they know what to expect, others stay away because they want a more “authentic” experience. As a result, while franchised restaurants can perform well in certain areas of Philadelphia and in certain segments of the restaurant industry, some restaurant franchisees find themselves struggling much more than they initially anticipated.

Whether you are planning to buy into a well-known franchise system or an up-and-coming franchise concept, you will want to make sure that the location you choose is appropriate for the customers you want to attract. Site selection is a key aspect of the franchise buying process, and it is one that can have implications for the definition of your franchise territory as well.

Schedule an Appointment with Philadelphia Franchise Attorney Jeffrey M. Goldstein

Are you thinking about buying a restaurant franchise in Philadelphia? If so, we encourage you to inquire about our fixed-fee franchise business review services. To discuss your options with Philadelphia franchise attorney Jeffrey M. Goldstein in confidence, call 202-293-3947 or request a free consultation online today.

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