Depends on how they’ve set up their franchise.
If they were smart, they set it up as a corporation without any personal liability and all liabilities are in the name of the corporatio, they can walk (personally, the business files for bankruptcy, all assets are sold to pay creditors, and the bank is out their money). If they set it up as a sole proprietorship, they’ll be on the hook for all liabilities.
For that reason, banks are not eager to hand out money to start up corporations. And most people end up taking out the personal loan anyway - or at least investing a significant amount of their own personal money.
If you’re willing to relocate, I’m fairly sure the city of Charlottetown, PEI needs a Booster Juice, right next to the U-PEI campus! I went to visit my sister there, and it was the one franchise I didn’t see on University Avenue, but I’m SURE it would go over very, very well. My sister alone could keep you in business!
Consider a few things:
(a) You will (generally) be operating a mostly-cash business. I knew kids in high school who worked at a high-volume yogurt shop. They were very pleased that they were supplementing their income by stealing $1,200 a week from the proceeds.
(b) Read the franchise agreement/prospectus very carefully. It defines (and limits) your business and legal options.
© Talk to existing franchise owners to get an idea of the challenges, how the company is to deal with, etc. (go to a town distant from yours to do this, that way they won’t feel they’re helping the competition).
(d) Ask the company for historical numbers on franchisee experience (how many fail, years to profitability, etc.). If they are hesitant to provide very full documentation, ask yourself whether you’ll be able to make a properly informed decision.
(e) Location is key. Some chains will have detailed locational analysis to help you pick a promising spot. Others will leave you on your own to make whatever damn fool guesswork decision you want.
(f) Know that many states have detailed statutes specifically governing what franchising companies can and can’t do when they are selling, and then interacting with the owners of, franchises. This is good because it allows you (compels you, I’d say) to read and understand those laws and the protections they do (or don’t) give you in your state. This is less good because it makes you wonder just what it is about the franchising business that apparently led many state legislatures to think it was rife with potential for franchisee abuse and disappointment.
One local person’s unsuccessful attempt.
Personally, I’d love to do it but it just seems to me WAY WAY too much money to enter something with such a high rate of failure.
Here is a New York Times article (registration may be required) about the problems many Quizno’s franchise owners have faced, opening with an account of one owner who committed suicide.
I worked at a McDonald’s 25+ years ago. The guy who owned our owned 4-5 others. According to what others (including some managers) said:
I- Owners need permission to buy additional stores.
A) They are graded, potentially, on all aspects of their operation
- Sometimes visits are announced
- Sometimes it’s a surprise.
B) All stores owned by one person have their grades summed and averaged.
II-You don’t know what they’ll be inspecting.
A) Food: they might order a hamburger and count the grains of onion on it, or the centering of the ketchup.
B) Premises: they might look for litter in the parking lot
C) Receipts: they want to see if you’re turning a profit for the mothership or following their accounting procedures
- Accounting procedures like most think of them
- Accounting procedures like McDonald’s tracks things that are wasted as well
D) Employees: they want to know if you’re using their prefabricated greetings and such
E) Etc.
F) All of the above; some of the above…?
III-Owners need permission to take vacation if they’re going to be 50 miles from their stores.
And so on. Real PITA. That said, how many bad McDonald’s have you been to?
One bad McD… in Kosice, Slovakia at 1am… they refused to give me extra pickles. It was the only place open.
I would still say look into a part time job in the biz. You will learn more abou the biz doing it for 10 hours a week for a few months than we could ever teach you here with an army of food service managers.