A World of Franchise Opportunity
A truly global brand, BURGER KING® is constantly seeking to refresh its offering through extensive research and development. Brian Johnston, Development Director - Central Europe and the Middle East, describes how new franchisees are brought into the network
The Burger King® system operates in more than 11,220 restaurants across 60 countries, including all 50 US states. The brand has achieved this global presence through its commitment to franchising - 91% of all Burger King® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades.
In its expansion via franchising, Burger King® has recognised the importance of installing systems and procedures to ensure the candidates best suited to owning and operating a franchise are awarded the opportunity to join the network (see the box on the opposite page for the qualification process).
To support new and ongoing restaurants in each country, Burger King® has a head office team that provides support and oversees the entire logistics operation. These offices operate Burger King®'s international training centres, which all new franchisees attend, and develop a network of approved food distributors which provide products, packaging and small-wares required for the day-to-day running of the restaurant. Franchisees place orders with these suppliers either over the phone or via the internet, and all goods are delivered within approximately 48 hours.
A pipeline of innovative new products is supported with strong marketing campaigns - regular television advertising continues to build upon strong brand awareness and attract customers into restaurants, while promotions increase sales and create customer loyalty.
Strategic marketing also plays a significant role in the growth of the Burger King® brand and its franchisees' success. Burger King® conducts public relations campaigns which serve to promote new products and customer promotions, and help to protect the brand.
All marketing activity is fuelled by regular customer feedback, either directly in restaurants or through independently commissioned research. This is an integral part of the marketing mix and ensures that customers get what they want and consequently that the franchisees are set up for success.
For the potential franchisee, personal financial investment levels can vary depending on the type of restaurant and proposed investment model. The initial amount invested by a franchisee can range from GB£150,000 to GB£750,000 and the franchisee will need to contribute at least 40% of the capital. When a franchise agreement is concluded a single fee of US$50,000 per restaurant is payable. In addition to this, the franchisee pays 5% of total sales, minus VAT, in the form of a royalty contribution, and an additional 5% of total sales, minus VAT, as contributions to the national marketing fund.
An approval process has been put in place which has been designed to ensure that all Burger King® prospective franchisees are supported in the application process and well into their trading period. The approval process includes nine clear steps, pertinent to both sole and multi-unit operators:
Step 1: Initial contact. The prospective franchisee contacts the Franchise Sales Department at Burger King® to register interest. An initial discussion will take place to establish motivation for and capability of becoming a franchisee.
Step 2: Franchise application. The prospective franchisee is sent the Initial Corporate Franchisee Application and supporting documentation. Once Burger King® is in receipt of the initial application materials and provided the prospective franchisee meets the initial criteria, an interview is arranged. The prospective franchisee will be given an information package, which is intended to summarise some of the basic facts fundamental to owning a franchise.
Step 3: Internal approval. After the interview Burger King® will perform initial finance/credit and legal approvals based around the information submitted and discussed. Information may include personal net worth statements and trade and personal references.
There is also legal approval, which outlines legal obligations, and a 20 hour orientation and evaluation at a designated Burger King® restaurant.
Step 4: Training and Senior Management Interview. Completion of a structured 220 hour training programme is required as is a formal interview by a member of the senior management team.
Step 5: Franchise Approval. Provided all the above criteria are met franchise approval is granted, although franchise approval may be withdrawn if the franchisee fails to continue to meet Burger King®'s relevant requirements.
Step 6: Site Selection. If the prospective franchisee has a proposed site then move to site approval stage. If not, then potential locations that may be available as part of the development process are discussed.
Step 7: Site Approval. Once a site is found, a standard form called the New Restaurant Site Pack is completed and submitted. Burger King® approves the proposed site by granting written Site Approval.
Step 8: Final Approval/Construction Starts. Building plans, designs, colours and landscaping are submitted to Burger King®. All franchisees must receive Building Plan Approval and be awarded a BK number.
Step 9: Franchise Agreement/ Opening. Prior to restaurant opening (normally within 14 days) the legal department will arrange to prepare for a franchise agreement to be executed by the franchisee and Burger King® corporation. A Franchise Fee invoice will also be raised and must be in place and payment made prior to opening.