Food Trucks -Part II: Franchising

Last week we posted on the food truck revolution in the United States. The post dealt with broad issues related to the food truck industry. Today’s post is about the food truck in the franchise context.

The Pros and Cons set out in last week’s post (Food Truck (R)evolution) all apply in a franchise setting. The ability to test a market, the advantage of the travelling billboard and ability to move to the customers all are advantages to a franchisor. However, determining whether or not a food truck can and should be a part of your franchise is something that takes a lot of consideration and analysis. This post is meant to give a few ideas on how a food truck could work into your existing franchise system, or how it can become a franchise system all on its own.

The existing franchise system can use the food truck in a number of ways. The most apparent way, at least to me, is to add a food truck as a separate franchise offering. Instead of offering a restaurant franchise in the traditional store-front sense, you can offer a prospective franchisee to become your food truck franchisee. The advantage is potential cost savings with lower overhead and start-up costs for the franchisee. If you do decide to go this route, you have the option of either wrapping in the food truck concept into your current Franchise Disclosure Document (“FDD”), or to have a separate FDD for the food truck concept. The decision on which route to take should be made with your qualified franchise attorney.

If you do not want to add the food truck as a franchise offering, you could purchase a franchise truck (or several), outfit it, wrap it and offer it for ‘rent’ to your franchisees in an area so that they can use it for special event purposes. This increases your exposure and helps to reach out to an audience that might not know your restaurant exists. This also is a great add-on benefit to your franchisees that are looking for ways to increase business and to get their name more fully into the community.

A new restaurant concept that starts as a food truck could expand their food truck business by offering food truck franchises. Unlike an existing restaurant franchise system, this type of franchise is limited to just the food truck. The advantage is that it potentially keeps franchisee costs down and gives someone the option for a (often seemingly) part-time business that the traditional store-front restaurant often does not allow for.

No matter how you choose to incorporate the food truck into your business, always talk to a qualified professional, including attorneys, and those in the industry, who can help you decide the best option for your business. 

The Food Truck (R)evolution

The food truck business has been around for decades. In recent years we have seen the food truck evolve from the ice cream truck to the truck with gourmet and specialty food offerings. Even television has picked up on the trend with the Food Network offering a reality show called The Great Food Truck Race.

Many have stated the food truck is a fad, but from what I have read, it appears that this next generation of food truck trend is here to stay. Many franchises are taking advantage of this trend and opting for a mobile expansion as part of their franchise offerings. Other food service businesses are opting for the straight food truck model forgoing the traditional brick and mortar location. There are pros and cons in determining both if the food truck business is right for you and whether it is a good business move for your business.

Pros

The biggest pro to the food truck option is the lower overall cost. A food truck is going to cost a lot less than a traditional storefront space. In addition, there are typically fewer employees and lower utility costs. And since location is everything in a business, the food truck can easily pick up and move its location to one that will better capture the market share. Food trucks also offer a level of convenience that many traditional restaurants struggle with.

This type of business is also a traveling advertisement. The traveling billboard saves on marketing and advertising dollars that a traditional restaurant would have to invest. With the growing interest in food trucks by the public, and the wider variety of food options offered by food trucks, free or low cost social media marketing was made for this type of business.

Food trucks also offer the customer a different type of food experience and because of the small size, it can provide for a more personal interaction between the owner and the customer. Businesses can engage the customer in a new way that may prove highly beneficial.

Lastly, the food truck offers the opportunity to test a market or location, without a lot of risk. If you are considering opening a traditional restaurant in a specific market or location, the food truck can help you determine relatively quickly and easily if there is interest in your concept.

Cons

If you think that a food truck will be an easy and simple business that you will only have to run 2-3 hours a day a couple of days a week, you are probably in for a big surprise. While open for businesses only 2-3 hours at a time, the successful food truck business can take up many more hours in a day. It has been referred to as a part time business requiring a full time effort.

The food truck that cannot get its food delivered quickly and efficiently to the customer, will fail. A food truck’s menu has to be compatible with the smaller layout and the different format for preparing and serving food. In one food truck experience I had, I waited for 35 minutes in 105º weather. Needless to say, they lost a customer. The business needs to be structured in a way to meet the expectations and needs of the food truck customer.

There are also more permits that may be required from the state, county and city/town which can often cost more in terms of time and money.