Hello all,
I’m curious if any amongst the membership here has much experience owning a franchise that doesn’t break the bank to badly (like Extreme Pita, Booster Juice, Capz, range of $150,000 to $350,000 start up costs roughly).
What got you into it?
Would you do it again?
On average how was the money vs how much time you put into it?
Would you recommend working at a similar style business before opening one of your own?
I suspect this is off to IMHO…
Anyway, I have many clients who own franchises. I’ve seen franchise costs from $30k to $200k. If anything, I think the more expensive ones are the better deal.
Ultimately, the final success of the business comes down to how much the person is willing to invest in the business, both in terms of cash and time. If a franchisor says you can run the business from your yacht in the Bahamas, go find another franchise opportunity. You can aspire to the yacht, but it’ll be 5 years or more before you get there.
You also have to look at the total cost:benefit ratio. A $50k fee might be more expensive than a $200k fee when you look at what’s involved. (Example: One of my $50k franchise clients paid the franchisor an additional $30k for consulting and had to provide $150k in equipment, for example.)
I would NEVER recommend buying into a franchise unless you have experience or connections in that industry already. Someone has to train and supervise the operation and no manager is as motivated as the owner. Don’t count on an employee or partner. They leave more often than you think they will (especially for things like health problems and family issues that even they have little control over).
If you’re learning the job from scratch, I’d add $200k to the money you need available for startup/operations - that’s about the going rate for tuition from the school of hard knocks. If you learn those things as an employee, they actually pay you to teach the same information.
dracoi made some good points. If you are looking for a combination of cheap and easy to get into plus minimal management overhead on your part and a huge return on investment, you aren’t going to find it. There are plenty of multimillionaires that already have that covered when an unusual opportunity pops up. You can become very wealthy owning several choice McDonalds restaurants for example but the startup costs are high and new owners usually can’t afford the high-volume locations to begin with.
Your answer for well-known franchises may be a Subway location. They have startup costs of less than $100K for some locations and they are the most common fast-food type outlet in the U.S. because they make it easier than most to get started. Many locations are much more costly than that but it is still cheaper than the $1+ million it takes for a McDonald’s in a prime location. You could build up from there but you could not be hands off. It is the retail food trade with many part-time workers after all with difficult hours and problems popping up all the time.
The money really is there but there is no shortage of people willing to compete with you for it.
Subway used to have a very low franchise fee, around $30k. It’s probably higher now but it may still be very cheap compared to other fast food places.
I believe Dominos will not let you get a franchise unless you have worked in one.
Pizza is dead.
Subway is oversaturated as well. There’s so many, they had to change their name to be able to add more stores.
What do you mean that Subway changed its name to be able to add more stores? What did the name change to?
I used to be admin assistant to someone who owned 3 Domino’s franchises. He was doing VERY well. He told me that he had started by successfully managing one store and that Domino’s lent him the money to buy it. With 3 stores, he had the money to buy the big house on the hill, nice cars and get a trophy wife.
He worked his ass off. If one of his drivers called in sick on a busy night, he would deliver pizza in his porche. He said he got really bad tips, but he didn’t care. He was motivated to keep the customers happy.
A year later, Domino wanted him to buy 7 more stores. There was a lot of pressure and he finally did it. He couldn’t manage all of those stores by himself, my job changed, and he hired 2 regional managers.
Less than a year later, he went bankrupt. He managed to keep 2 of his stores and his porche. Of course, I lost my job in the deal, but I do still see him at times.
Pizza is not dead, its the easiest thing to order for work lunches and I do it all the time, which is how I see him. He’s told me that the worst mistake in his life was to buy the other 7 stores.
So…start small. Don’t let the company push you into doing something that feels wrong. If you are happy with with your income with one franchise, don’t buy another. And don’t get a trophy wife. I still hate that bitch.
This.
I have been on the managerial end of two separate franchise businesses that crashed and burned within a year. I have to say that the main reason this happened was the owners had NO idea what the hell they were doing. They each came from different businesses and had been successful owners in those businesses. They seemed to have the “well I ran a successful ad agency, so therefore I can run a successful car wash” attitude. Retail is a tricky beast, and just because you were successful in one industry, does not mean you will be in another.
Curious about these two claims.
In my area, pizza is booming. At least I think it is. In my area, I’ve got 7 delivery places and 4 more non-delivery places within 10 minutes of my house. New places open all the time and the old places don’t close. All but 1 of these places are franchise.
As for Subway changing its name…I don’t see anything on Wikipedia about that. What’s the scoop?