QSR May 2022

S P ON S O R E D B Y B I D V I TA The Massive Cost Restaurant Franchisees Can’t Predict Construction costs are the biggest investments that restaurant franchisees make. They’re also the most difficult to estimate. / BY KARA PHELPS

locationwithinminutes. Designed to be user friendlywitha straightforward setupprocess, the platformcan create detailed estimates for projectswithina fewminutes, comparedtothe twoweeks itmaytypicallytake togeneratebids the traditional way. “Pretty much everything is on-demand,” Borisov says. “But in construction, if a project comes in15–20percentoverbudget and it takes the contractor four weeks longer than antici pated, that’s very typical. This has become the norm in franchising, in fact, where projects are late. Franchisees aren’t happy about that.” Since BidVita eases some of themost com mon frustrations that franchisees experience, the platform can also helpmaintain positive franchisee-franchisor relationships. “Thebiggest issue infranchising is franchi seeunhappiness,”Borisovsays. “If franchisees are unhappy, the brand isn’t going to get refer rals. Most of that friction happens during the franchisedevelopment process,when franchi sees are in themarket for real estate locations ormakingsuretheysignagoodlease.Theyneed data points to work with their biggest invest ment.Evenwithoutconstructionplans,BidVita cantell themwhatalocationisgoingtocost,how longit’sgoingtotaketodevelop,what’s included andexcluded, andthemajormilestonesonthat project. Ifthey’renegotiatingalease,BidVitacan tell themwhethertheyhaveanappropriateten ant improvementallowanceor if the landlordis notwillingtoupgradethespace.Franchiseesor theirreal estateagentscanlearnallof this from their phone in less thansixminutes.” Timeandforeknowledgecanmakeabigdif ference. “Wegiveour franchiseesand franchi sorsaglimpse intothe futurewithtechnology,” Borisov says. “The data our platformprovides canhelp you see the finish line during all proj ect phases.” Z

W hen it comes to opening a new res taurant franchise, thebiggest price tag is construction, especially in today’smarket.Butnewfranchiseesoftenlearn that obtainingarealisticestimateforconstruc tion costs is usually impossible until late in the process,whichinmostcases istoolate,because theupfrontcommitmenttocost isalreadymade. Even franchise disclosure documents (fdd s ) referenceabroadpotential range. Thisuncertainty isn’t ideal for franchisees, manyofwhomentered franchising tomitigate their risk asmuch as possible. One of the ben efitsof franchising isbuying intoanestablished systemwith no surprises, but the largest cost involved is often the least knownupfront. “If you are in franchising, construction canmake up 60–70 percent of the cost of your entire project,” says Slava Borisov, CEO of

BidVita. “Like any large investment, you need data to be able tomake an informed decision. Everything else in the franchise system is known with 10–15 percent deviation, but for construction, you’regivenarange that insome cases isupto10times the lowest cost. That can bemassively frustrating to franchisees.” BidVita isaplatformdesigned for franchis es’ commercial constructionthatusesartificial intelligence (ai) to check construction costs, timelines,milestones, andqualifications inreal time all over theU.S. and delivermore precise datawithout needing input froma contractor. Franchisors canuseBidVita to increase royal ties and decrease timelines to opening by an average of four months, and franchisees are happier knowing their costs, timelines, and milestones in the early phase of development and compare the construction costs for their

To learnmore, visit bidvita.com.

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MAY 2022 | QSR | www.qsrmagazine.com