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how hard is it to buy into a franchise business
Posted on 4/24/24 at 7:13 am
Posted on 4/24/24 at 7:13 am
Me and the wife are talking about moving to a different state, some place slower paced. And we was discussing jobs and what not but what if we took 150-200k and threw it at a popular franchise business...
12
Posted on 4/24/24 at 8:42 am to LordAkri67
Depends on the chain.
Some require you to work as a cashier and fry cook first. Bojangles is an example - there was an NFL player who worked at one during the summer because his plan for life after football is to own Bojangles franchises.
Other places might just let you write a check and take over a location.
Some require you to work as a cashier and fry cook first. Bojangles is an example - there was an NFL player who worked at one during the summer because his plan for life after football is to own Bojangles franchises.
Other places might just let you write a check and take over a location.
Posted on 4/24/24 at 8:56 am to LordAkri67
Buy into Popeyes, but hire competent employees. You'll make bajillions!
Posted on 4/24/24 at 9:07 am to LordAkri67
I have a friend that bought a Quizno’s franchise. He worked about 80 hours a week and still lost pretty much everything. Sold his house, got divorced, and filed bankruptcy all in under 3 years.
Quizno’s screwed him hard. They would put out so many coupons he was losing money. Quzino’s was making more money on the increased sales #s upping their franchise fee & him having to buy all his product from the franchise.
Quizno’s screwed him hard. They would put out so many coupons he was losing money. Quzino’s was making more money on the increased sales #s upping their franchise fee & him having to buy all his product from the franchise.
Posted on 4/24/24 at 9:23 am to weadjust
quote:
Quizno’s
Posted on 4/24/24 at 9:30 am to LordAkri67
Many franchisors require a fairly rigorous screening process. Some require a minimum net worth.
You'll need to hire an attorney to review the franchise agreement for you, etc.
Many people don't understand what a franchise is. As a franchisee, you will be subject to many restrictions and constraints regarding your menu, suppliers, pricing, etc.
Make sure you understand what you are getting into.
With that being said, an investment into the right franchise can be very financially rewarding.
You'll need to hire an attorney to review the franchise agreement for you, etc.
Many people don't understand what a franchise is. As a franchisee, you will be subject to many restrictions and constraints regarding your menu, suppliers, pricing, etc.
Make sure you understand what you are getting into.
With that being said, an investment into the right franchise can be very financially rewarding.
Posted on 4/24/24 at 9:48 am to LordAkri67
Franchises are tough.
An average UPS Store does $1M+ in annual sales and half the franchise owners make less than $50K per year.
Costs can be all over the map depending on the industry. Franchise fees may only be the beginning. A royalty or percent of net sales is common. In the restaurant space being forced to buy all your supplies from the parent company is also common. Geographic exclusivity needs to be discussed up front.
At the end of the day; it often feels like the only person making money is the parent franchise company. Be sure to talk to persons with existing franchises before jumping in.
Given the amount of cash you have it’s going to be somewhat limiting. As a reference; most recognizable fast food chains start by requiring access to $1M liquid cash. For more lucrative ones like Chic Fil A that number quickly jumps to $2-3M. At which point you’d be forced to take on partners which has its own host of issues.
An average UPS Store does $1M+ in annual sales and half the franchise owners make less than $50K per year.
Costs can be all over the map depending on the industry. Franchise fees may only be the beginning. A royalty or percent of net sales is common. In the restaurant space being forced to buy all your supplies from the parent company is also common. Geographic exclusivity needs to be discussed up front.
At the end of the day; it often feels like the only person making money is the parent franchise company. Be sure to talk to persons with existing franchises before jumping in.
Given the amount of cash you have it’s going to be somewhat limiting. As a reference; most recognizable fast food chains start by requiring access to $1M liquid cash. For more lucrative ones like Chic Fil A that number quickly jumps to $2-3M. At which point you’d be forced to take on partners which has its own host of issues.
Posted on 4/24/24 at 10:06 am to MikelArteta
quote:
but hire competent employees.
Man, I wonder if the rest know this secret.
Posted on 4/24/24 at 10:06 am to LordAkri67
quote:
And we was discussing jobs and what not but what if we took 150-200k and threw it at a popular franchise business...
$150k maybe in 1998, today? You probably need closer to $1mil for most decent franchises.
Think about this, if you could start a franchise with $200k and hire a competent GM for $80k and make money then there wouldn't be many franchises available.
Starting a franchise blind takes a lot of hard work, a lot of luck, and a lot of money.
A large portion of the success from a franchise will depend on your labor, labor cost, and rent cost.
ETA: Moving to a new area you have no experience with and starting a NEW franchise to you seems like a really bad idea to me. It would be one thing to have experience with the franchise and then move to open a new one.
This post was edited on 4/24/24 at 10:11 am
Posted on 4/24/24 at 10:57 am to LordAkri67
Is there a place you frequent? Might want to talk to the owner of the location.
For example, if you talk to the owner of the Slidell Chik-Fil-A, he might be able to give you general advice, especially if you're looking to own a different comany's location. (Or if CFA is trustworthy about honoring existing franchise territory, since you won't be a threat to him.)
For example, if you talk to the owner of the Slidell Chik-Fil-A, he might be able to give you general advice, especially if you're looking to own a different comany's location. (Or if CFA is trustworthy about honoring existing franchise territory, since you won't be a threat to him.)
Posted on 4/24/24 at 11:40 am to LordAkri67
Most responses are discussing food places.
I used franchise gator and interviewed several.
Bought territory rights for home remodel franchise in Pensacola area and Gulf Shores/Fairhope. Have to pay back 10% of revenue to corporate. Thinking the way mortgages are, remodels will remain strong for foreseeable future. Plan to sell both locations within 10 yrs.
I’m putting in double your estimated costs though…
I used franchise gator and interviewed several.
Bought territory rights for home remodel franchise in Pensacola area and Gulf Shores/Fairhope. Have to pay back 10% of revenue to corporate. Thinking the way mortgages are, remodels will remain strong for foreseeable future. Plan to sell both locations within 10 yrs.
I’m putting in double your estimated costs though…
Posted on 4/24/24 at 11:41 am to LordAkri67
Start by browsing online franchising magazines and franchise tradeshows, and rule out any franchises that advertise there.
Because word travels fast among small business owners, and franchisers that make them a decent profit don't need to advertise.
Because word travels fast among small business owners, and franchisers that make them a decent profit don't need to advertise.
Posted on 4/24/24 at 11:43 am to LordAkri67
Here's a franchise FOMO true story:
In 2002, I approached Graves about franchising (through me) Cane's to the Northeast. I had been bringing droves of people down for LSU games and every single person would start looking forward to the trips just because of the damned Cane's! Believe it or not, it actually was considered sort of an open question whether or not yankees would eat the stuff.
This was before they had a huge number of stores and they didn't even have one franchise yet. He actually said yes - BUT...he wanted me to move to BR and work in stores for 9 months. He wanted me to start on the fry line and work every position so I knew it inside and out.
Well, I was young, and just engaged and living 1500 miles away and I just wasn't willing to do it.
In 2002, I approached Graves about franchising (through me) Cane's to the Northeast. I had been bringing droves of people down for LSU games and every single person would start looking forward to the trips just because of the damned Cane's! Believe it or not, it actually was considered sort of an open question whether or not yankees would eat the stuff.
This was before they had a huge number of stores and they didn't even have one franchise yet. He actually said yes - BUT...he wanted me to move to BR and work in stores for 9 months. He wanted me to start on the fry line and work every position so I knew it inside and out.
Well, I was young, and just engaged and living 1500 miles away and I just wasn't willing to do it.
Posted on 4/24/24 at 11:53 am to BamaCoaster
quote:
Most responses are discussing food places.
Right. There are way more franchises out there than just food. There are several in my industry, which is glass. Someone sent me one of one of the franchise marketing documents a while back. Initial cost were in the ballpark of $150k-$250k, $40-50k liquid, $150k minimum net worth. That info is a little outdated and are probably more post-covid. I sell glass to the various franchises, and most seem to do pretty well. It's work, though. It's not mailbox money. Don't forget that.
Posted on 4/24/24 at 1:13 pm to BottomlandBrew
A family member just started a men's barber shop franchise a month ago. They said they needed $500k to get the franchise then another $200k for the buildout of the storefront. First month open they did over $20,000 in total revenue, which was a little more than break even. Goal is to get to about $30-$32,000 a month so they can take home $10k a month. Then open another one.
They'll get there but they didn't do much market competition research, there were 13 other men's grooming places within a 20 mile radius of their place.
They'll get there but they didn't do much market competition research, there were 13 other men's grooming places within a 20 mile radius of their place.
Posted on 4/24/24 at 1:24 pm to BottomlandBrew
quote:
There are way more franchises out there than just food. There are several in my industry, which is glass
I agree certainly. But I'd argue outside of food starting a franchise in most other industries is just dumb. Food you have recipes and ingredients that are vital to doing well, and you also have name recognition.
Most other businesses if you hustle on advertising and put out a good product then you will earn business. The issue with franchising is that a significant portion of your profit goes to the franchise. The times it does make sense is when a franchisee gets priority with product and information, for example I know a carpet cleaner and he was telling me during covid they had a hard time with repairs and chemicals because the company he purchased from gave their franchisees priority.
Posted on 4/24/24 at 1:45 pm to HangingWithMrCooper
so 700k invested to take home 10k a month??
you can get 7k a month doing nothing and throwing it into QYLD or RYLD.
you can get 7k a month doing nothing and throwing it into QYLD or RYLD.
Posted on 4/24/24 at 2:56 pm to Fat Bastard
quote:That's actually a 17% earnings yield (which I assume has at least some tax benefits).
so 700k invested to take home 10k a month??
quote:It's not like that's risk free either.
you can get 7k a month doing nothing and throwing it into QYLD or RYLD.
I don't really like the franchise model and I think retail in general isn't a good business to be in - but I still don't think your comparison is very apt.
Posted on 4/24/24 at 5:51 pm to Big Scrub TX
oh you do not like that basic example that many here would use?
i coulda said RE rentals where he can get 20 and 30% like i am getting now.
suck on those apples.
a franchise with that amount of return and risk
i coulda said RE rentals where he can get 20 and 30% like i am getting now.
suck on those apples.
a franchise with that amount of return and risk
Posted on 4/24/24 at 8:13 pm to Fat Bastard
I mean yeah you are assuming that someone has $700k liquid laying around, investing it in something more passive makes a lot more sense than a franchise. They didn’t have to outlay that cash all up front. From what they told me it is done in payments.and they are utilizing business loans as well.
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