The Pros and Cons of a Raising Cane’s Franchise

November 9, 2018

Raising Cane Franchise Review Logo - Franchise Know How

Niche restaurants can either be extremely successful or a complete flop.

The target audience must be large enough to support the operation of the restaurant and leave room for growth.

Raising Cane’s has found the perfect niche for their particular business model: chicken fingers.

Everyone loves chicken fingers.

They are a safe option in a new environment and a good old standby. As a nation of people who love their chicken fingers, we have opened the doors for a restaurant like this to succeed.

Raising Cane’s founder, Todd Graves, teamed up with a friend, Craig Silvey, to dream up the idea behind the restaurant. Silvey, who was enrolled in classes at Louisiana State University at the time, wrote the business plan for Raising Cane’s with Graves and turned it in as an assignment.

The plan was not received with much enthusiasm, from Silvey’s professor, nor from any potential investors. Unable to secure funding, Graves decided to earn the money on his own.

After a few years of saving, the two entrepreneurs were able to obtain an SBA loan and open their first location in Baton Rouge, near the LSU campus, in 1996.

Growing Their Brand

After opening the initial location, Raising Cane’s continued to open locations in the Baton Rouge area. In 2001, they opened their first location outside of Baton Rouge, in Lafayette, LA.

From there, they have continued to open locations around the United States, and even some international locations. While they do not have locations in every state, they have spread out across the continental U.S., with plans to expand to Alaska and Hawaii in 2019.

Their current overseas locations include Kuwait, Saudi Arabia, Lebanon, United Arab Emirates, and Bahrain.

According to the Raising Cane’s website, there are new corporate-owned restaurants in the works for the next couple of years. They have also stated that, while they have franchise-owned restaurants open already, they are not open to selling more franchise licenses at this time.

They have decided that their priority is to work on growing their corporate stores and supporting their existing franchises and, therefore, they are not putting any effort into focusing on acquiring new franchisees right now.

When They Reopen to New Franchisees

Even though they will not be selling any new franchise licenses right now, for those business owners interested in Raising Cane’s, having the information regarding what it takes to get started is never a bad idea. This way, they can be prepared when the company opens back up to franchising.

First and foremost, the aspiring franchisee will need to purchase a license from Raising Cane’s. Without this license, the Raising Cane’s name, logo, and products will be off limits.

Before they closed their doors to new owners, they were charging $45,000 per license. This is a high license fee, especially when compared to many other restaurant franchises.

For example, it is nearly double that of Panda Express’s $25,000 license fee. They do, however, offer a discount for purchasing multiple franchises, which most franchisors do not.

After getting the license, there are still many costs associated with opening a new restaurant. To open a new Raising Cane’s, it is estimated that you will need between $768,000 and $1,938,000 in startup costs.

These costs will cover things like space rental, equipment purchasing, staffing, and inventory stock for approximately the first three months of operation.

It is incredibly important to have the capital to cover these costs, as it will take time before your restaurant is generating enough revenue to sustain itself and, eventually, turn profits.

Raising Cane’s does not offer financing assistance to those looking to open a new franchise. If you do not have the liquid capital to cover start-up costs, you may be able to apply for a small business loan to help you out.

Franchising Over Time

Once you have gotten your license and opened your first location, it will be important to maintain a solid relationship with Raising Cane’s by adhering to their guidelines and paying their fees.

Those that fail to do either of these run the risk of having their license revoked, or not renewed at the end of the initial licensing period. When a franchise license if first purchased, it is good for a period of 20 years.

After the 20 years have passed, a license is eligible to be renewed for 10 years, given both parties are satisfied with the terms and relationship.

Startup costs and licensing fees are not the only costs a franchisee will have to be concerned with. Aside from the obvious, like employee staffing and inventory costs, they are also responsible for paying fees to the franchisor.

Currently, Raising Cane’s is charging their franchisees 5 percent of revenue in royalty fees, and an additional 4 percent of revenue in advertising fees.

The royalty fees are paid to the franchisor for the use of the name and logo as designed by the creators. The advertising fees cover the cost of all advertisements.

The franchisor pays for all forms of advertising; there is no need for individual franchise owners to seek out and purchase additional ad space. For this convenience, the Raising Cane’s charges the ongoing fee.

How Are Their Established Franchises Doing?

Simply purchasing a franchise does not guarantee that it will be a successful business.

Having the established name to work off of is great, but if the relationship between the brand and their customers, as well as the relationship between the brand and their franchisees, is not healthy, it can spell disaster.

Taking a look at how established franchises are doing before you purchase can give you a good idea of what to expect.

Looking at the Net Franchise Growth Rate will tell you how many franchises are opening versus how many are closing. If more are closing than opening, it is safe to assume that there are problems in the brand.

Raising Cane’s has a positive Net Franchise Growth Rate at 31, though it is significantly lower than the average rate of 97. This is not necessarily indicative of a poor system, just a slower growth rate.

It appears as though the franchises that do open are staying open and operating at sufficient levels, which is cause for optimism.

What the Franchise License Will Get You

There’s a certain level of service that is expected to accompany the purchase of a franchise license. One of the perks of buying a franchise is having the guidance of the franchisor to help you establish your restaurant and attract their clients.

Raising Cane’s does not appear to offer much in the way of guidance. They do not offer any type of classroom or on-the-job training for new franchisees.

They also do not offer technical support of any kind.

This sends the message that Raising Cane’s is not very concerned with the success of their franchisees. They appear to be content to collect their $45,000 license fee and do not really care if the franchise succeeds or not.

Most franchisors would want their licensees to have their best foot forward when operating their business and give them all of the tools they may need to help ensure their success.

If Raising Cane’s does care about their franchisees, they do not show it well.

Raising Cane’s is officially open now at 4634 Candlewood Street, Lakewood, CA 90712. They are serving up chicken fingers, cole slaw, sandwiches, crinkle cut fries and texas toast. Lakewood March 20, 2019. Photo by Brittany Murray, Press Telegram/SCNG

Overall Interpretations of Raising Cane’s

Raising Cane’s has the potential to be a huge success across the United States, and the world. They specialize in a dish that most people love, making their target audience and potential customer base huge.

Because they are not yet everywhere in the country, there are a lot of untapped markets that would welcome them. People love new options and if you can open a restaurant in an unsaturated area, you have the potential for big success.

The problem with Raising Cane’s is that they charge a high price tag but offer little in return. It’s a huge buy-in cost, but they do not offer much, if any, support to ensure your restaurant flourishes to its potential.

Because they are not selling any new licenses right now, but instead focusing on boosting their current restaurants’ success levels, the decision is easy on whether or not to invest in this brand.

Even if a franchise was available for purchase, it may not be the best purchase to make. Their support system is nearly non-existent and their growth is slow.

The cost of this franchise is high in comparison to others that have better track records. It is highly advisable to weigh all of the pros and cons before purchasing a license with Raising Cane’s, or any other franchise for that matter.

Starting a business is a risky move in and of itself. Help yourself establish at least a little security by opting for a license with a company that will work with you toward success, and not just leave you to your own devices.

Doing your homework could be the difference between the success or failure of your franchise business.

How To Earn 6-Figures In A Lead Generation Business, A Stable & Long-Term, Scalable Business In 2019

Although franchising is a great business model to start, there are a lot of considerations to do before you decide to push through the plan and start earning in this method.

First, it requires a lot of money for a start-up, which usually costs at least $1,000 to as high as $250,000 including the real estate.

Second, it requires a comprehensive research to make sure your investment wouldn’t put to waste.

You could take advantage of the popularity of the brand—as someone has already done it earlier—and earn from it. In the end, you couldn’t take the whole sum of the income because of the fees it comes after. A few of them are the royalty fees and marketing/advertising fees.

This is the reason why I embrace the lead generation business model more than any other types of businesses available out there. In this industry, I don’t have to spend so much money for the sake of expanding someone’s brand.

If you try to look at it, you don’t own the business as a franchisor. You simply borrow his business to earn an income.

In my case, I own 100% of the online properties and there are 88 of them on the web. Apart from that, I don’t have to spend hours or days or months of marketing research just to make sure my investment will give me the ROI or the Return of Investment.

I may sound cocky here but it’s true. There are so many local businesses out there in need of customers to make sure they earn—at least the average monthly sales.

The problem is they don’t have the resources they need. And it’s pretty obvious why. Our clients are small business owners. They run errands all-day long from customer service to clerical work after business hours.

I don’t think they have any other ample time to learn the basics of running a website for the sake of online visibility.

Building a website alone—along with the traditional SEO, backlinking method—doesn’t take effect. It won’t work. Even spending hundreds of dollars on ineffective social media marketing won’t be enough.

What they need is the BEST position to their target market. They need to bull’s eye the market in their niche.

This is the same principle behind the success of big international companies like Uber and Airbnb.

They don’t sell physical products. They aren’t franchising, so they own 100% of the company earnings. The same goes with my lead generation business.

Here’s the catch.

In building lead generation websites like I have been doing for a while now, I am paid higher than any lawyer and doctor combined with passive income. How cool is that? It’s possible.

Take a look at my first lead gen site I made for my first Limo client. I haven’t touched anything on the site since I made it back in 2014. Yet, I still receive monthly paychecks worth $750 for 4 years now.

If you are curious and want to learn more, you can go visit our lead generation coaching program and see yourself the best online marketing strategy that works.

Leave a Reply

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}