Franchises
A
franchise is the licensing of a business concept to a private
individual or company.
Some
Franchisees are so successful that they hold several franchises
with the same company for multiple locations. I once met a Taco
Bell Franchisee that had so many locations that he had 700 employees.
That's quite a job managing seven hundred employees.
Franchises
have become an extremely popular business opportunity in the
US over the last 35 years. Get a copy of any money making opportunity
magazine. You will find hundreds of business franchising opportunities
ranging from ice cream carts to McDonalds hamburgers. .
Franchises
generally have a much higher success rate than the average business
since they have already been proven in the marketplace. Sixty
percent of small businesses do not last two years. However, franchises
have a rather formidable success rate of over 85%.
You
receive a complete business plan and training in the every aspect
of the business. MacDonalds sends you to 'Hamburger University'
and Burger King insists that you actually work behind the counter
of your store once a week.
I
stopped at a Burger King franchise once that was owned by Jim
Otto, the former 'all pro' center on the Oakland Raiders NFL
football team, and there he was behind the counter cooking up
hamburgers.
Training
like a Franchisor provides is a real benefit for people that
want to start their own business, but don't want the big risk.
However,
franchises have their drawbacks
A
franchise really ties you down. The Taco Bell franchisee I mentioned
doesn't get home until 10 o'clock at night and his wife works
with him so that they both are out 'till ten every night of the
week. I suppose you could say that he could build up the business
and sell it... but then he's retired and that can become a drag
too.
So
many people don't realize the huge sacrifice that they must make
to carry a franchise.
I'm
reminded of the couple that bought a 7-11 franchise. In order
to make any money, they tried not to hire lot of outside help.
So, in order to cover the 24 hours the store had to be open,
the husband is working 12 hours a day and the wife is working
12 hours a day. They never see each other and may sleep in the
same bed... but not together. The happiest days of the their
lives were when they bought the franchise and when they sold
it. Now they are both back working at 8 hour a day jobs and getting
all the holidays and vacations. They are seeing each other and
they are very happy to finally be out of the franchise business.
You
must choose a franchise around a business you enjoy. I once had
a great deal of contact with a former pro golfer who bought a
golf franchise. He loved it. He could make more money than he
ever could as a golf pro at a Country Club and set his own hours.
Plus he knew all the equipment inside out. Any new products were
immediately his cup of tea and if he liked them he could recommend
them with a tremendous reception from his customers. I you can
find something like that to do, you've got it made.
It's
not cheap... Last time I heard, a MacDonalds franchise went for
$250,000. That was a long time ago. They could be up to $500,000
by now. Most good franchises should cost you at least $50,000.
Anything less than that and you should question it.