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I see your point although I would disagree with you. I do agree it can be considered a "slowlane" for some but that is true with any business. Profit potential can easily be 6 figures a year out of just one location, factor in another 10, 20, or 100 locations and you can see the benefits. Of course, expansion will require more management thus bringing down the bottom line of individual locations compared to an owner/operator but well worth it in my opinion.I'm gonna cry "slowlane" here on this one. Reason being- you are focused on plugging into someone else's system, looking down the barrel of long hours and maybe 6 figures a year if you're lucky. Why not focus on creating your own franchise?
...I wanted to add, that while a franchise can be a good income generator it does not fit with the definition of "fastlane". There are other benefits to a franchise, such as a proven system and a support network- but the real money is in developing the system, not selling the product.
The number of stores to be openedThey can be very profitable, otherwise you wouldn't see one person own several stores. A gentleman in my home town owns 5 or 6 subway shops.
What franchise is this?I got so many questions about franchising
that I took a gig at the Cdn head office of one of the largest.
Here's the thing.
To make money, you need to have more than one restaurant
(though look at return on investment,
if you're investing a million dollars per restaurant
and getting $100,000 a year in salary,
is that a good deal?)
own the rights to an area
be one of the "examples"
(i.e. suck up and/or be the first in the region)
figure out some way to scam the system.
Otherwise for an established franchise,
it is a job and not usually a well paying one.
Because for the established franchises,
all your sales and ordering info is sent automatically to the head office.
You also have to report quarterly, often monthly financials.
head office figures out how much they can charge you
- for rent (because they often hold the real estate)
- for supplies and raw materials
- for advertising
- for franchise fees
Usually there is a formula
figuring out how much they can take from you
and magically that's how much they do.
Think of it this way...
they need to make their growth numbers
and there is a long, long, long list for owner operators.
You are not, at all, bringing anything special to the table.
The other big danger with the big franchises
is that the owner operator
can not control anything.
Head office sets the menu, the price, the advertising, the branding, etc.
so purchase price is set on best case scenario
and you don't have a hope of making it better than that.
I was interested because the few franchises I have invested in have been nothing like that. I have heard of a few that operate with a similar business model as you described but not very many. I'm not trying to argue that franchises are good or bad either. I think they are what you make of them and for some they can be very profitable and for others they can be the worst choice they have made.MM, you know that I can't answer that.
I probably shouldn't have written what I did
but I felt obliged to give people things to think about.
Awesome, another input.I was interested because the few franchises I have invested in have been nothing like that.
The two franchises I have worked with both larger chains involved in fast food. I have tried to focus on franchises with low start up costs that are well known. The ROI can vary depending on many factors but I have seen anywhere from 40%-70% return yearly with some involvement from myself with day to day operations. My focus has been turning around locations that have struggled because of bad ownership.Awesome, another input.
So what has been your average return on investment?
In the major fast food restaurant
I worked with,
it was about 10% but that didn't include the cost of the owner operator's time.
Once you factor in that time,
the return goes from okay to low.
I had a friend who owned 2 X Subways, and they made about $35k a year each.
There is a huge range of businesses that can be franchised, from manufacturing through services, to wholesale and retail.Need to develop a brand that can sell franchises! That's Fastlane IMO
Im very excited to say I've developed a brand that is getting interest in franchising out in the cannabis industry. It will take me a good part of 2019 to get to that point, but exciting to have a few prospective partners lined up and ready to go. I need to start the leg-work on legalities as its going to be complicated.Need to develop a brand that can sell franchises! That's Fastlane IMO
That is amazing you were in four countries.There is a huge range of businesses that can be franchised, from manufacturing through services, to wholesale and retail.
Franchises in the restaurant and fast food industries are notorious for their oppressive restrictions, but many franchise systems have rules that I consider unreasonable.
When I instructed my attorney to prepare a standard franchise agreement for me, he nearly fell off his chair when I emphasized that I wanted it to be fair to both parties, and if it was weighted in one direction or the other, it was to favor the franchisees.
It turned out to be the shortest franchise agreement he had ever written, but it worked perfectly. I believe the equitable terms prospective buyers found when first viewing the contract was a major factor in making it so easy to sell the franchises.
Over the 22 years that I ran my franchise empire, spread over four countries, I only had a problem with one franchisee, and I had to terminate the agreement due to his failure to pay royalties.
Friends have occasionally asked me to review franchises they were contemplating buying, and in every case I had to tell them that I would not buy one like the one they were considering. Good franchises are hard to find.
I know of some franchises that are designed to fail!
One in particular worked this way: Turnover and profit figures from one successful franchisee were used, but they didn't disclose that the franchisee had received special treatment that made sure he did well.
When one of the numerous franchisees failed, the franchisor happily terminated the agreement and sold that territory to another unsuspecting buyer. Those repeated lump sum fees were what made that franchisor rich.
Being a franchisor is a great way to scale and you can do it rapidly if you have a good system, including good marketing and high profit margins.
If you decide to go down that road, I hope you will learn from my experience that treating your franchisees well pays great dividends.
That was relatively easy because the niche that I chose was relevant in all English speaking countries, and once proven in one country it was not difficult to sell in another. In case you do set your idea in motion, I will give you a brief outline of how it worked for me.That is amazing you were in four countries.
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