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Texas Restaurant Law

Is Franchising The Only Key To Restaurant Success?

Posted in Contracts, Franchises, Franchising, Legislation, Liability, Litigation, Negotiation

We talk a lot here about franchising and for good reason. After all, many restaurant owners make great money by developing or buying into a great franchise concept. However, some restaurant owners take a  different approach: they develop their own brand and remain the key figure in each additional restaurant.

Stephen Pyles is one such restauranteur. He’s on the cusp of opening his latest creation: Stampede 66. According to a terrific article by June Naylor of the Eat My Words blog at Texas Monthly, Stampede 66 will be a Texas-sized monster, with 7,000 square feet and room for 130 seats. For nearly 30 years, Stephen Pyles, a  five-generation Texas native, has knocked out restaurant after restaurant here in the Lone Star State.

With all of the talk about franchising, why would Mr. Pyles continue to produce new restaurants without franchising? We have not interviewed Mr. Pyles, but here are some of the advantages surrounding this strategy:

Control

Control is a huge issue for restaurant owners. Whether it is your creation or you are buying into a franchise, you care about control, and you lose some of that when you deal with franchises. On the other hand, if it is your restaurant and you are the sole owner and operator, you control the look and feel of the restaurant, the taste and quality of the food, and every other aspect of the business. This level of control is not for everyone, but it can streamline your operation and save a lot of headaches.

Fewer Issues And Costs

With fewer “cooks in the kitchen”, there are tremendously fewer issues when you remove the franchise element from your operation. As the owner, you have the control. With the control, you get to change the menu when you want. You get to change the costs when you want. Further, you have no one else to pay. Thus, franchises can be a great source of capital to expand your business, but you can actually decrease your costs by not franchising.

Fewer Regulation

Many restauranteurs fail to understand the tremendous regulation associated with franchises. In Texas alone, there are three different sets of regulating statutory bodies that govern franchising. That level of complexity absolutely requires hiring lawyers and accountants to deal with it, and there are costs associated with their services. Without the franchise, those issues and costs are eliminated.

Conclusion

There are many restaurant owners that need franchising, either to raise capital (as a franchisor) or to have a solid game plan and concept (as a franchisee). However, there are just as many that decide that franchising is either too costly or complicated, and they rely solely on their own skills and decision-making to run their restaurants. Thus, the question is this:  “Which concept, franchises or non-franchises, is more successful?” The answer is that franchises certainly can be quite successful, but so can non-franchises. If you doubt that, just ask Mr. Pyles.