If you want to know everything about franchise restaurants, just ask Tarin Scarnato, President of Franchising for Vero Chicago Pizza.
Raised in the restaurant business — “My daycare was sleeping on pizza boxes until I was old enough to start working,” he laughs — Tarin studied every aspect of the hospitality industry before returning to the family business with a bold new direction for the company. “When I eventually rejoined my dad, it wasn’t just about running a restaurant. I wanted to take us to a new level with franchising.”
Photo submitted by Vero Chicago Pizza
Restaurant franchising 101
A restaurant franchise is a business model where everyone can win — owners, franchisees, and customers. For you as the restaurant owner and franchisor, it can be an efficient way to boost your brand, your base, and your bottom line.
With franchising, you allow others the rights and the licenses to replicate your restaurant. And in exchange for your brand trademarks, business model, training systems, and continuous support, you collect royalties on their sales.
Those who become your franchisees have the opportunity to run their own business, but with less risk and with far more resources. And customers can get access to their favorite menus and meals in more locations.
When you should franchise your restaurant
Over three decades ago, Scarnato’s father and uncle founded Buddyz Chicago Pizzeria in the northern suburbs of Chicago. When the family relocated to Arizona in 2013, they brought their recipes and restaurant concept with them — and saw sensational results. In 2020, Scarnato helped lead the rebrand to Vero Chicago Pizza and launched the franchising model.
“A major sign for us was when our customers would consistently bring up wanting to open a Vero for themselves,” he recalls. “We initially expanded with family before we began franchising, so we gained a good understanding of what the process would look like.” Since then, Vero Chicago Pizza has expanded to seven locations across Arizona’s East Valley, and Scarnato is looking to grow franchises in new states.
“A great product alone doesn’t make for a great franchise — the products and systems need to be trainable and consistent,” advises Scarnato. “We’ve taken strides to offer an amazing and high-quality product that can be made, managed, and sold by any level of employee or owner. From there, it gave us the confidence we needed to make the leap into franchising.”
Every situation is different. As a restaurateur, you have to decide if franchising is the right move for your business by evaluating multiple factors, such as:
The popularity and profitability of your restaurant: If your brand is built on being a beloved local landmark, can it expand while keeping its unique appeal?
The scalability and repeatability of your menu, operations, and processes: Can you replicate your business model in a systematic way?
The capital you have at your disposal: Can you afford the initial investments? And will the projected ROI be worth it for you and your franchisees?
The vision, values, and objectives you have as a restaurant owner: Is expansion in sync with your brand values?
If you’ve considered these issues and decided that restaurant franchising is the best strategy for your business, then you’re ready to take the first step.
Photo submitted by Vero Chicago Pizza
How to franchise your restaurant
What does it cost to franchise a restaurant? And how long does the process take? These are some of the most common and pressing questions for restaurateurs. At the outset, here’s what you need to know.
It takes time to determine the cost of franchising a restaurant or how much you should charge to license your brand. You can start by building a budget and strategy that takes into account factors such as the necessary marketing you’ll need to attract potential franchisees, the funds you’ll have to dispense as franchisees begin to establish themselves, and, of course, the initial investments you’ll have to make in your franchise disclosure document (FDD).
“Once we had a strategy, talking to a franchise lawyer was the immediate next step in getting our FDD and brand guidelines in place,” says Scarnato. “A knowledgeable franchise lawyer can have a significant impact on your start.”
A reputable franchise attorney will help you craft an effective FDD that outlines your startup costs and fees and your position in the market, among other key considerations. At the same time, a knowledgeable attorney can provide a crash course in franchising while connecting you with industry organizations, professionals, and networking events.
“The initial costs were mainly administrative expenses — franchise lawyers, trademarks, licenses, et cetera,” says Scarnato. But it was worth it. “From there, the next step was finding the best initial franchisees that could not only grow and adapt with us, but become the new faces of our brand.”
Don’t be hasty when it comes to franchising. On average, it takes between three and four months from the time you embark on becoming a franchisor to the time you can establish your first franchise.
“The first step for us was to determine if our systems made sense to someone who’s never been in the restaurant business — which for us meant menu changes and production changes,” explains Scarnato. “We felt that some of the items and procedures only made sense because we had years of experience. We couldn’t ask the same of new restaurant owners and their employees. Making those initial changes made an immediate impact on how our training process went.”
All of these discoveries are imperative in building out your franchise operations manual — the handbook that instructs franchisees on how to proceed effectively.
On top of that, bear in mind that your original restaurant won’t serve as the “franchisor.” You’ll essentially be creating a new franchise company, typically a corporation or LLC, dedicated to selling and supporting franchises while collecting fees and royalties.
“Although we were in the restaurant business, becoming a franchisor is an entirely new business,” says Scarnato, who notes that a major challenge was becoming less hands-on with Vero Chicago Pizza and shifting his focus to administrative efforts. “For us, we had to get out of the day-to-day business of running restaurants and turn our attention to training, growing, and marketing.”
This also required a shift in mindset. “You’ve spent so many years building your core business and concept, but now you have to make decisions that are best for the franchises. We’ll never stray from our standards and foundation, but we will always have to adapt to new changes and opportunities.”
Where you should open a franchise
Location is critical when it comes to determining where and how to open a franchise restaurant. “When we assess potential locations, we look at the demographics first,” says Scarnato. “We pride ourselves on being family-friendly, so we look to where the families are. Being near schools is always great, opening doors to sponsorships and community events.”
If your goal is to grow beyond your immediate jurisdiction, you must communicate this to your franchise lawyer. That way, your FDD can be made on a “multi-state” basis, with addendums and clauses that comply with local regulations for every jurisdiction.
Franchising vs. opening a second location
There’s no question that franchising takes a lot of work in the initial stages, and not all restaurants are necessarily best suited to this model. You might prefer to open additional locations without franchising. This allows you to remain in full control of your business, including trademarks, menus, and customers.
But if you choose to embrace franchising, you can watch your brand expand through the efforts of your franchisees and their employees. And you can set your sights even higher.
How a DoorDash partnership can help franchises
When Scarnato and his family arrived in Arizona and re-established their restaurant, they decided against offering delivery. “We felt we could offer the best experience if we focused primarily on dine-in and carry-out,” he says. “But then, with the rise of DoorDash in our area, we could finally introduce delivery. It took the burden of delivery off our shoulders while we could focus on providing the best dine-in and carry-out experience.”
Having an exclusive partnership with DoorDash is an effective strategy for franchises, since dealing with multiple platforms across multiple locations can become overly complicated.
Whether or not franchising is right for your restaurant, DoorDash offers a range of solutions and support to help your business reach its full potential.