Recently, I started looking into the world of franchising and gathering as much info as I could.
Why?
At first because it's something that I wanted to potentially structure my business for in the future. My mindset was that franchises are proven money making systems. Their value is immense. That to "franchise", you have to have something amazing like McDonald's. My goal for my research was to learn how to brand a tiny bit closer to McDonald's.
However, after looking into it for a bit, I started getting disappointed with what's out there. Most of the franchises that exist are not money-making systems, but high paying CD's, high paying jobs, or often times slavery disguised as an opportunity.
Take for example these charts that I found:
Link: https://www.forbes.com/sites/sagewo...-industries-are-most-profitable/#6d73ca325b6d.
Car dealers make under 2% profit.
Restaurants: under 4%.
Gas stations/convenience stores: 2.7%.
Now factor in the royalty rates.
Car dealers: 2-10% typically of gross sales.
Restaurants: 5-6%
Gas stations/convenience stores: 3-7.5%
www.franchisedirect.com
www.entrepreneur.com
www.franchisedirect.com
In most of these scenarios, what you have isn't an income stream, but another form of voluntary high-paid slavery. The franchisee isn't the one that's making the money, but the franchisor.
So you're telling me if I get a Circle K, put up all the investment capital, pay you a franchise fee, work my a$$ off for 100 hours a week to get it going, then you'll come in and take 5-10% with the ad fees, whereas I only get 3%? Go F*ck yourself.
In what world is that acceptable? Turns out in ours.
McDonald's
Let's hop to McDonald's.
How much do you think the average McDonald's makes a year?
The investment cost is typically $1,000,000 to $2,200,000.
How much do you think you'd make on $1M to $2.2M?
Turns out .... $150k a year on average. Here's what it costs to franchise a McDonald's store
Here's a breakdown of one store's income.
F*ck.
And you know how much McDonald's makes on average per store?
$156,491.877
Just do the math and divide up the net income by the number of stores.
For every $1 you make, they make $1.
Owning one of their franchises isn't owning a "business", but a high paying CD that comes with more risk attached to it.
It's ridiculous and upsetting.
The Mindset shift
After researching all of this, I had a bit of a mindset shift. @Walter Hay has been pushing his franchising book on the forum, and mentioned that the sales were slower than the other books. My theory was that it's because most people don't think they have something franchise-able. However, after doing my research, the conclusion I came to is that this form of thinking is a limited belief and nothing short of bullshit.
Do you know how much income the average franchise brings in?
www.cnbc.com
According to this article, these amounts. Some of those amounts are respectable, however, they are by no means impressive.
There's probably 100+ of us on this forum that have some sort of business that 1) makes more than that; and 2) can be taught to someone in a different geographic location.
For example, in my business, with a $100k to $250k capital investment, I'm confident that someone with the time and hustle can turn that into a $100k income at a minimum, and as high as a $1M+ in bigger markets like New York City.
My conclusion
Franchising isn't just for the McDonald's, Subways, etc. The returns that they're giving people are absolute dogshit. Franchising is for anyone and everyone that has a system that is scalable and can provide a good source of income for the franchisee.
If you have a business that makes $100k+, can be taught to someone else, and they can replicate it for low 6-figures, then you have something that is franchise-able.
What do you guys think?
Why?
At first because it's something that I wanted to potentially structure my business for in the future. My mindset was that franchises are proven money making systems. Their value is immense. That to "franchise", you have to have something amazing like McDonald's. My goal for my research was to learn how to brand a tiny bit closer to McDonald's.
However, after looking into it for a bit, I started getting disappointed with what's out there. Most of the franchises that exist are not money-making systems, but high paying CD's, high paying jobs, or often times slavery disguised as an opportunity.
Take for example these charts that I found:
Link: https://www.forbes.com/sites/sagewo...-industries-are-most-profitable/#6d73ca325b6d.
Car dealers make under 2% profit.
Restaurants: under 4%.
Gas stations/convenience stores: 2.7%.
Now factor in the royalty rates.
Car dealers: 2-10% typically of gross sales.
Restaurants: 5-6%
Gas stations/convenience stores: 3-7.5%
Auto Franchise Fees and Costs - Business Report III | FranchiseDirect.com
Auto Franchise Fees and Costs: Auto franchises come in all shapes and sizes. This is reflected in the variation in fees and capital required to start an auto franchise.
www.franchisedirect.com
Is the Price Right? - Buying a Franchise Opportunity - Entrepreneur.com | Entrepreneur
Having a hard time determining if a franchise opportunity is a good deal or not? Here is how to determine whether a franchise is a good deal or overpriced
www.entrepreneur.com
Circle K Franchise Costs & Fees, Circle K FDD & Franchise Information | FranchiseDirect.com
Find detailed information about Circle K franchise costs and fees. Circle K is a retail convenience store.
www.franchisedirect.com
In most of these scenarios, what you have isn't an income stream, but another form of voluntary high-paid slavery. The franchisee isn't the one that's making the money, but the franchisor.
So you're telling me if I get a Circle K, put up all the investment capital, pay you a franchise fee, work my a$$ off for 100 hours a week to get it going, then you'll come in and take 5-10% with the ad fees, whereas I only get 3%? Go F*ck yourself.
In what world is that acceptable? Turns out in ours.
McDonald's
Let's hop to McDonald's.
How much do you think the average McDonald's makes a year?
The investment cost is typically $1,000,000 to $2,200,000.
How much do you think you'd make on $1M to $2.2M?
Turns out .... $150k a year on average. Here's what it costs to franchise a McDonald's store
Here's a breakdown of one store's income.
F*ck.
And you know how much McDonald's makes on average per store?
$156,491.877
Just do the math and divide up the net income by the number of stores.
For every $1 you make, they make $1.
Owning one of their franchises isn't owning a "business", but a high paying CD that comes with more risk attached to it.
It's ridiculous and upsetting.
The Mindset shift
After researching all of this, I had a bit of a mindset shift. @Walter Hay has been pushing his franchising book on the forum, and mentioned that the sales were slower than the other books. My theory was that it's because most people don't think they have something franchise-able. However, after doing my research, the conclusion I came to is that this form of thinking is a limited belief and nothing short of bullshit.
Do you know how much income the average franchise brings in?
How much does it really cost to run a franchise business?
Don't look at annual revenue alone when evaluating a franchise business opportunity. You need to know exactly how much it costs to run a franchise.
According to this article, these amounts. Some of those amounts are respectable, however, they are by no means impressive.
There's probably 100+ of us on this forum that have some sort of business that 1) makes more than that; and 2) can be taught to someone in a different geographic location.
For example, in my business, with a $100k to $250k capital investment, I'm confident that someone with the time and hustle can turn that into a $100k income at a minimum, and as high as a $1M+ in bigger markets like New York City.
My conclusion
Franchising isn't just for the McDonald's, Subways, etc. The returns that they're giving people are absolute dogshit. Franchising is for anyone and everyone that has a system that is scalable and can provide a good source of income for the franchisee.
If you have a business that makes $100k+, can be taught to someone else, and they can replicate it for low 6-figures, then you have something that is franchise-able.
What do you guys think?
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