Do You Need a Million Dollars to Buy a Franchise?
Most people I speak with are surprised to learn that there are around 4,000 franchises that span about 90 different industries. 89 industries have nothing to do with fast food, which is always top of mind and a common connection people make about franchising.
The fact of this matter is that you can own a home-based franchise that carries an investment of around $10,000 all the way to owning a resort hotel that costs north of 100 million dollars to open.
I like to bracket franchises like this:
Service based business - $10,000 to $150,000
In-line stores in a strip mall- $100,000 to $1 million
Stand-alone buildings – $1 million to $150 million
The Franchise is full of rules and regulations
Well, yes, this is true, but not to the extent that some think. I will also submit that the older the franchise company, the stricter the operational procedures are within the franchise operation. However, these rules are there to help you be successful and to protect the integrity and equity of the brand you're invested in.
However, franchisors are always looking for innovation from their franchise owners who are in the trenches. I suggest watching the Movie The Founder with Michael Keaton. It's the story of McDonald's and the president and franchise legend, Ray Kroc. It will give you lots of clarity surrounding the franchise model.
Unfortunately, Ray Kroc, who really is the grandfather of franchising, gets greedy and dark; however, understanding how modern franchising and fast-food got started is well worth your time if you're thinking about getting into the franchise game.
Did you know that the Filet o Fish sandwich was created in 1962 by a Cincinnati Franchise Owner, Lou Groen? The new fish sandwich was in response to falling hamburger sales on Fridays resulting from the Roman Catholic practice of abstaining from meat on Fridays. While the sandwich's fish composition has changed through the years to satisfy taste and address supply shortcomings, the framework of its ingredients has remained constant; a fried breaded fish fillet, a steamed bun, tartar sauce, and pasteurized processed American cheese.
Here is a trailer for the 2016 movie, The Founder:
Personally, I am responsible for my Maui Wowi smoothie franchise for becoming kosher. I was working a trade show that was attended by largely by orthodox Jewish people. In their tradition, they do drink milk unless a Rabbi blesses it and then deemed kosher. When the Kosher Jewish folks saw my fruit smoothies, they were excited because they had a new drink option at the convention center—however, one small issue. Our smoothie mix had a yogurt base to make it creamy. Yogurt is made from milk, so it was a no-go for my Kosher customers. Mormons made our smoothie mix from in Utah, where the franchise was founded.
We ended up finding a producer in Pittsburgh who ran a Kosher facility. Problem solved!
Franchising gives you the latitude to make decisions. The rules and regs are geared toward keeping the brand consistent. Your investment can be not much more than a car, and your earnings can still be great.
You will be tied to a store all day
Depending on the business and how you are with delegating, that could be an issue. However, most great franchises teach you to work 'on' your business and not 'in' it. Some franchises only require 10 hours of the owner's time. It's manager-run and really an investment model, not a career transition model.
For example, I know of a haircutting franchise that will not grant someone a franchise if they have a haircutting or beautician license. The franchisor is looking for corporate managers to translate their wisdom and experience into managing several units and delegating to a salon manager with haircutting experience. It seems counterintuitive at first, but if you understand business, it makes a ton of sense.
Another option for having regular hours is a business-to-business concept operated from a home or an executive office. B to B operators typically work 9 to 5, no nights, no weekends, and no holidays.
Follow Your Passion
Do what you love, and the money will follow…. I've read the stories of people who wouldn't say "no" to letting go of their favorite activity and risked everything to evolve that interest into a profitable business. Good for them. They are among the tiniest minority.
Remember, the people who turned a hobby into a business that failed no longer pay money for PR pieces. They don't make it into a brief "feel-good piece" shown during the evening news. If there's something you enjoy doing that's outside of what you do for an income, keep it as a hobby; you'll do it when it's of interest to you and when you feel like doing it. Thus you'll continue to enjoy it. By definition, when you turn your hobby into a business, you no longer have a hobby.
A few years back, I was working with two friends who were laid off from Wall Street. They wanted to go into a golf franchise together. Why, because they love to play golf.
I said I could help you buy into a golf franchise, but it will be selling golf equipment in a store. You're not going to be standing at the beer cart on the 9th hole greeting your customers with a cold one. Get a reality check on your real day-to-day of the business you're thinking about for a business model.
So, I shared with the two wall street guys what my system is and how I help folks pick a franchise. I told them that if they happen to pick a franchise with something to do with their hobbies and passions, they will hate that passion in a few months if they are trying to pay their bills with it. If we find you a business that will give you all the time and the money in the world to Golf to your heart is content.
That is the essence of my service. It's what I did with my first franchise and what I've been helping people do since April of 2005. The Wall Street refugees indulged me and ended up in a home healthcare business. When we spoke around the holidays last year, they told me they couldn't answer the phone fast enough. And now, they got to play golf all over the world.
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