How to Start a Foreign Fast-Food Franchisee in Nepal?

How to Start a Foreign Fast-Food Franchisee in Nepal?


Let’s admit it, we all have dreamed of having a  foreign fast-food franchisee in Nepal thinking about the food we see in Int’l Vlogs and Movies. And among those, some might even though about bringing a foreign fast-food franchisee to Nepal. If that is you, this is the article that fits your needs. So, let’s dive into talking about what it takes to open a foreign fast-food franchise in Nepal.

burgers and fries inside box |  Foreign Fast-Food Franchisee

Foreign Fast-Food Franchisee | Initial Investments

Although you can have quick profits with a Foreign Fast food chain, setting up the business requires a lot of cash. You could require an initial investment from a couple hundred thousand USD to up to even a couple of million USD. To open a McDonald’s or Taco Bell restaurant, you must have at least USD 750,000 in liquid assets. For KFC, your asset should be at least USD1.5 million. 

The initial investment can easily exceed 1 million USD in most cases. Most networks even require you to pay the monthly royalty fees that can cost 12% of gross sales. 

Here are some of the popular Fast food chains and their required initial investments.

Baskin-Robbins

  • Initial franchise fee: USD25,000
  • Estimated total initial investment: USD94,350 to USD402,200

Papa John’s

  • Initial franchise fee: USD25,000 (waived for new store owners)
  • Estimated total initial investment: USD300,000

Taco Bell

  • Initial franchise fee: USD25,000 to USD45,000
  • Estimated total initial investment: USD525,525 to USD2.8 million

KFC

  • Initial franchise fee: USD45,000
  • Estimated total initial investment: USD1.4 million to USD2.7 million

McDonald’s

  • Initial franchise fee: USD45,000
  • Estimated total initial investment: USD1 million to USD2.2 million

Pizza Hut

  • Initial franchise fee: USD25,000
  • Estimated total initial investment: USD357,000 to USD2.2 million

You can also check out the available franchisee opportunities and the required investments here at Smergers.

McDonald's, Foreign Fast-Food Franchisee

Foreign Fast-Food Franchisee | Benefits

Obviously, bringing an already established brand in Nepal will have benefits, especially if it’s what Nepalis have been dreaming of. Here are the advantages that you will benefit from.

  1. Low risk because of the established business rather than starting up your own.
  2. Less emphasis on marketing as it’s their job to do the marketing and all the market analysis. You will be working on sales.
  3. The demand in the market is enormous as people have been dreaming of eating a Whopper from McDonald’s, a Taco from Taco Bell, and so on.
  4. You don’t have to invest time in making strategies and plans; instead, follow a tested system of their own.

Foreign Fast-Food Franchisee | Risks

Yes, not everything is flawless, and you will have to bear some risks while bringing a Foreign Fast-food franchisee to Nepal. 

  1. The initial investments are enormous. You will have to pay monthly/yearly royalties and the franchise fee, which might be a lot in some cases. 
  2. Even after paying a lot of investment, you need extra money to operate the business by yourself up to at least a year due to the lower return rate.
  3. You cant let your creativity flow and experiment with strategies that could even lead to your business’s permanent suspension.
  4. You will have to follow the contract strictly, which in some cases can be taxing due to restrictions.
  5. Failure to provide good customer service might get you to pay extra legal fees.

Foreign Fast-Food Franchisee | Revenue 

The profits in a Fast food restaurant can get a little tricky. While paying a Franchise fee, rent, and royalties, you could be letting out a lot of money from your pocket. You have to pay a lot of fees for the advertisement and marketing too.

  • McDonald’s charges Franchisees must also pay rent to the company, a percentage of monthly sales. 
  • Subway charges franchisee owners a weekly fee of 12.5% of gross sales minus the sales tax. The company says 8% goes toward the franchise royalties, and 4.5% goes towards advertising.
  • Franchise owners have to pay a royalty fee equal to 5.5% of gross sales and a marketing fee equal to 4.25% of gross sales to Taco Bell.

While paying this cash, the profit will be only a little when a lot of cash goes out of hand. So, you have to price the meals accordingly within a sweet spot of not charging customers unfairly and not breaking your bank through royalty fees.

Nepali Fast-Food Franchisee

Nepali entrepreneurs are also emerging with remarkable fast-food chains providing the best foods in multiple locations. Bajeko Sekuwa has even extended outside the country, establishing Franchises in New York and Texas. 

Fast-Foods chains like Syanko, Bajeko Sekuwa, Pepe Pizza, Chicken Station, Shandar Momo, and many others have been successfully established in any locations around the country. You can’t go wrong with these Nepali Food franchisees too.

Nepali Fast-Food Franchisee
Bajeko Sekuwa in New York

The protocols shall remain the same, and advantages and disadvantages while opening such Nepali-based fast-food franchisee the fees will vary being substantially less. Still, the market will also be small, unlike the foreign fast-food Nepalis have been dreaming of.

You can also check out our recent similar article about starting a Dress Rental Business in Nepal.