Living with the effects of the COVID-19 pandemic has conditioned many people to do things from home. From working to shopping to watching newly-released movies, many Americans have fully adjusted to doing everything from the comfort of their couch or dining table. As a result, many retail businesses are still struggling as restrictions begin to lift, and this includes fast-casual and sit-down restaurants.
Enter the virtual restaurant. Virtual restaurants, also known as virtual kitchens, bring the dining out experience home. They allow customers to enjoy restaurant-quality meals without going out, and they seem like a good idea for the post-pandemic world. Right? As franchise lawyer Jeffrey M. Goldstein discusses, for individuals and groups thinking about pursuing virtual restaurant franchise opportunities, there are some important considerations to keep in mind:
5 Important Questions about Virtual Restaurant Franchise Opportunities
1. Is the Virtual Restaurant Concept Truly Here to Stay?
There has been a lot of talk of the COVID-19 pandemic causing permanent changes. But, is this really the case? With restrictions being lifted and more Americans getting vaccinated every day, brick-and-mortar restaurants are already reporting more traffic. Is the virtual restaurant concept ultimately going to prove to be a fad, or is there space for both types of restaurants in the post-pandemic world?
2. Does the Brand Have Recognition and Staying Power?
A recognizable brand is one of the hallmarks of a viable franchise opportunity. Are you considering a franchise opportunity with a well-established brand that already has proven staying power? Or, are you exploring a startup concept that is seeking to leverage the current desire for restaurant-quality meals at home? Both can be viable, but there is a certain amount of inherent risk in choosing an unproven franchised brand.
3. Is the Franchise Truly a Virtual Restaurant Concept?
Is the franchise truly a virtual restaurant concept, or does it have both virtual and in-person components? Does the franchise agreement allow the franchisor to implement system modifications that could eliminate the virtual concept if its popularity fades in the future? Franchisors often reserve broad rights to mandate “updates” and other modifications; and, while some of these can be necessary and beneficial, others can be costly and undesirable.
4. What is the Term of the Franchise?
How long will you have the right to own your franchise? Is this long enough to allow you to build a profitable business? Is the term so long that you could end up legally bound to operate an outdated business if virtual restaurants ultimately prove not to last?
5. What are the Other Terms of the Franchise Agreement?
Finally, what are the other terms of the franchise agreement? Franchise agreements tend to be heavily one-sided, and prospective franchisees must carefully review and negotiate the terms of their agreements to ensure that they have adequate protections in place.
Request a Free Consultation with Franchise Lawyer Jeffrey M. Goldstein
Are you considering a virtual restaurant franchise? If so, it will be important to have the Franchise Disclosure Document (FDD) and franchise agreement reviewed by an experienced lawyer. To discuss your franchise opportunity with franchise lawyer Jeffrey M. Goldstein, call 202-293-3947 or request a free consultation online today.