Thinking of Buying a Franchise?

At some point most Americans realize working for someone else in this day and age could be a dead end or even worse, a situation fraught with insecurity. Let's face it, a "real job" just doesn't cut it anymore, and it’s a far cry from the American dream. With the current American trend toward outsourcing and pay raises that can't even keep up with inflation; a majority of Americans are looking for a way out. Some may already have a clear vision, while others just know they need to declare independence from the rat race any way possible.

A franchise agreement may seem like just what you need for a change in your career and life. After all, everyone already knows about Subway, Midas Muffler, Dunkin Donuts, Dominos, and the thousands of other businesses that line the streets and fill the strip malls of North America. Hopefully, the information here will save you the years of frustration commonly experienced by most new business owners who attempt to work the traditional brick and mortar business or start a franchise.

As a franchisee, you'd have the privilege of using the company's name and recognizable storefront, along with its trade secrets. Franchise fees can be quite reasonable (most less than 40K), but that's only the beginning.

You will need an upfront investment that amounts to much more than the franchise fee. For example, according to a survey which appeared in the article "Annual Franchising Overview" (Bond's Franchise Guides) the average cost of a motel franchise was $27,300; but the estimated required start-up capital or line of credit was $6,600,000. Yeah, that's with 2 commas. OK, that's a motel. What about a small-scale shop that sells donuts, pizza, cookies, chocolates, or bagels; which carries an average franchise fee of $24,676? The estimated start-up capital was still a whopping $261,165! In addition to arranging this financing, most franchisers will have requirements for your personal net worth.  So call your accountant, because you are going to want to look good on paper. Oh, and call your lawyer too. You will need him or her to review the contracts. These contracts will bind you to the franchiser's terms, which will include restrictions, requirements, and specifications that will be imposed on you forever. You should also be aware that most franchisers will not be very flexible on altering the terms of their contracts; so you’d better be sure you understand what it is you are signing.  You must also qualify for licensing. But let's say you've got enough saved up for the fee, you meet all the requirements, and obtain the proper licensing. 

It sounds like a sweet deal, doesn't it?  What could go wrong?

Owning a franchise is not easy, and anyone who goes into one believing that the business will run itself is destined for failure. In fact, you may feel like you’re still working for someone else once you discover all the responsibilities that come with a franchise agreement. You will be dealing with employees (some unreliable), customers (some complain), and your contact people at the parent company are, in effect, your new bosses.  Just try doing something (like offering a new product or changing the store layout) without running it by the corporate office first, and you will get a quick lesson in what we are talking about here.  There may come a point where you will feel more like a glorified manager than a business owner; and adding insult to injury, you paid for it!

Next, do you have enough money to run the business until it starts turning a profit? Remember, you must factor in payroll, employee training, equipment, rent, maintenance, insurance, inventory, payment on the business loan; and don't forget to send the franchisor its 4-8% monthly royalty of the TOTAL SALES (not of profit)!!! Lastly, you had better be sure you are comfortable with the franchise that you ultimately select,, because you will be spending a majority of your time on location, working in your business, not on it.

Your vacations and family time will be limited.

There is an Alternative Plan

There is a much less complicated way to achieve financial independence and success without jumping on the franchise roller coaster that never stops. There is a viable, legitimate way to earn an exceptional income without the huge investment, the loss of freedom, or the sacrifice of time with your family. Many Americans are discovering that they have options that were not available even a year ago. When comparing this new business model (NBM) against the traditional business model (TBM) here are some things to consider. The initial TBM investment is generally 25K-2.5M, with an average of 5 years (which most TBMs will never make) until the business shows any profit, 15% profit when it actually does, with 15 hour work days. The initial NBM is generally 2-25K investment, with an average return in 30-60 days, 75% profit, with 3 to 5 hour work days, no employees, no inventory, no rent, no insurance, less taxes, and more freedom. In addition, some of the nation’s top financial authors and gurus are touting this home-based business movement as a revolution destined to create more millionaires than any other industry in history.

More and more Americans are running multi-million dollar businesses from the comfort of their own home, but where did they start? Not all home-based businesses are created equal.  Unless you already have a product and a strong advertising and marketing background I would recommend starting online with a discerning eye.  Some sell buckets of hot air while others have a great product but lack the system, training, and support that make all the difference to your bottom line. Since there is no limitation on how many different home-based businesses you can participate in, I recommend starting with a top tier program that has a turnkey proven system in place and avoid following a lone individual. Look for a professional team with the proper support in place. You will find the training is well worth the entry-level cost. Top Tier Direct Sales opportunities have a much higher success rate then do low cost "old school" MLM models. This is simply because they do a lot of the heavy lifting for you, in effect making it very possible to replace your current income in less than 6 months. If you’re looking for the easy way out or get rich quick deals then this is NOT the business for you. You should expect to reinvest your initial earnings back into building your business. Nonetheless, it is still better than spending years building a successful TBM business only to feel trapped in it as you very well may if you signed a franchise agreement.