Franchise, partnership or your own brewpub

Three routes, three kinds of risk

You can build your own brewpub, bring in a partner who funds or runs part of it, or take on a franchise from an established brand. None of these is the safe one. Each moves risk around. Going alone puts it all on you. A partnership shares it and adds the risk of the partner. A franchise swaps some operating risk for fees and for dependence on the franchisor.

The right choice depends on your money, your skills and how much control you need.

Your own brewpub

You choose the brand, the beer, the site and the menu. You keep the profit and carry the loss. You also build everything from nothing: a recipe range, a supplier network, a reputation. This route needs the largest amount of your time and usually the largest sum at risk. It suits someone with brewing or restaurant experience, a clear idea of the customer and the patience for a slow start.

Your fixed costs set the target, so start with break-even.

A partnership

A partner may bring money, a site, a kitchen skill or a licence. The question is what each person brings and what each is paid. Typical splits of equity, salary and profit differ widely, so put them in writing. Decide who has the final say on the beer, on the menu and on spending above a limit. Decide what happens if one partner wants out or cannot keep paying in.

A partner who funds the project but never walks into the brewery has a different role from one who works the floor every day. Name the roles. These are matters for a lawyer and an accountant, not for a handshake. We can help you model the money. We cannot advise on the legal agreement. Nor should a friend.

A franchise

A franchise gives you a brand, a system and support in return for fees. The fee structure usually has an up-front payment and an ongoing share of revenue, but the terms differ and you must read them. What you are buying is a brand and a method. Ask what the franchisor will actually provide: site selection, training, recipes, supplier terms, marketing. Ask whether brewing happens on site or comes from a central facility, because that changes the economics.

Franchise agreements also fix things you may not expect, such as which suppliers you must use, what you may put on the menu and whether you may brew your own seasonal beers. If a restriction would hurt the beer or the price, find out now. Ask how many outlets are open, how many have closed and whether you can speak to existing operators without the franchisor in the room. Do not rely on projections supplied by the seller. Run your own, using your own rent and wages.

Compare them on the same sheet

Build one model per route using the same site and the same volume. Include the capital, the fees or profit shares, the salary you can draw, the break-even volume and the cash you need in the first year. Our guide to capital costs lists the blocks to include. Then add the exit: how do you leave? What do you get?

Control and exit are the two lines that owners forget to price. A brewpub that cannot be sold or handed on is worth less to you than the same brewpub with a clear way out. Write down, before you start, the outcome you would count as success in five years. Then test whether each route can deliver it.

Questions to ask before you sign

• Who owns the brand, the recipes and the licence? What happens to them if we part?
• What am I paying and when? What do I get for it?
• Who decides when we disagree?
• What if sales are below plan for a year?
• Can I sell my share? To whom?

Licensing matters here too. In India, who holds the licence can change who controls the business. Rules differ by state and change, so check with a licensing adviser.

Common questions

Is a franchise safer than going alone?

Not automatically. It can reduce some operating risks but adds fees and dependence on the franchisor. Run the numbers for both.

How should partners split equity?

There is no single rule. Base it on what each brings in money, skill and time, then put the terms in a written agreement drawn up by a lawyer.

Can I run a brewpub without brewing experience?

You can hire a brewer, but you must be able to judge quality and cost yourself. A brewer you cannot assess is a risk.

Should I talk to existing franchisees?

Yes, without the franchisor present. Ask about real sales, real costs and how support has worked in practice.