[Steve9]

Has anyone here ever brought a franchise business?

Has it been a good investment so far?

What franchise businesses are the best?...there seems to be so many types available these days.

[Laner]

My best friend from high school went this direction. He had a small sports store and after we graduated he went in to business with a larger chain. His business expanded and he learned a lot.

He sold and bought another franchise. This time as the sole owner of said franchise. Selling medium to high priced watches and sunglasses in a mall, in an oil rich city.

Bought a second franchise from the same company. Different mall, but same idea. A little more work, for a lot more money.

He sold the majority ownership to the franchises last year and bought the rights to any more stores locating to his city. He now reps two of his biggest selling brands over a large area. Less stress, more travel.

He always said that buying a franchise is essentially buying yourself a job. To make the big bank you need to have all the franchises in a town, or area.

One of my dads buddies owns all the franchise Lube shops in a northern Alberta oil town. The guy has more cash than he knows how to spend.

[paninaro]

(10-10-2013 11:51 AM)Laner Wrote:  

He always said that buying a franchise is essentially buying yourself a job. To make the big bank you need to have all the franchises in a town, or area.

This. If you own one Subway, you're working there all the time, and you make some money because your labor costs are low (you don't take a salary). To really make it work, you need a bunch of Subways and then you can work economies of scale.

[Cattle Rustler]

(10-10-2013 11:44 PM)paninaro Wrote:  

(10-10-2013 11:51 AM)Laner Wrote:  

He always said that buying a franchise is essentially buying yourself a job. To make the big bank you need to have all the franchises in a town, or area.

This. If you own one Subway, you're working there all the time, and you make some money because your labor costs are low (you don't take a salary). To really make it work, you need a bunch of Subways and then you can work economies of scale.

I know a guy who does this. He started with one, he worked in it then got another, and now has three franchises. They bring quite a lot of money once you work them although it took about a year for one store to finally start producing a profit, and that was after an investment injection.

Getting store manager is the essential part. When you got many business (he has 5 diff stores) your store managers will be the live or die factors. His best store went from the best in the area to the worst, it failed an inspection. The same thing happened at the second store.

Why did the stores start to fail? The managers quit. He didn't want to give them a raise (25K a year, unpaid vacations, and unpaid mandatory holidays), wanted them to work more hours, and always wanted more performance. From there, it's been a free fall to failure. You can't motivate your employees when they're working for 7.75.

[lurker]

My firm does a lot of franchise law. Most people are coming to us to formulate exit strategies from the franchise. Think about it.

Oh, and for the love of God, don't buy a Subway.