Franchise Investment

The Franchisor has spoken and tells you that a franchise investment minimises your risk of failure. It is a great way to get a return on your investment right? However they can't and wont give you any projected earnings or profits, not even a sample. Doesn't that seem odd. The whole point of investing in anything is to get a return on that investment. Even if you bank your money, you check the interest rates. With a franchise you invest into the ether. It's all based on hearsay and maybe's. It is based on the lowest common denominator. Find 1 successful franchisee out of 100 and they direct you to them, not the other struggling 99. What a way to secure your money. If your are investigatnig there is no point talking to current franchisee's because even if they are failing, they will not tell you as they don't want to damage their chances of improving, they certainly don't want a reputation as a failing business. If they are up for sale, again they will not tell you the truth as it may limit their chances of a sale. So the best people to talk to are franchisee's that have already sold or closed down they will tell you the truth as they have nothing to hide.

The No.1 reason franchisors do not make earnings claims is that the results are not attractive enough for you to then make a franchise investment.

You should expect to get around 10-15% profit on your investment. So if you paid $120,000 for your franchise. After paying all your bills, outgoings, royalties, taxes and wages. You would get $12-$18000 per year.

If you break that down further, in most smaller franchises the owner works there, so give yourself a believable managers wage say $50,000. At best $50,000 + $18,000 for a year = $68,000.! WOW thats worth it. NOT! That is IF and that's a big if, you are one of the successful ones. So for around $68,000 you will work upwards of 80 hours a week, never see your family and be in constant stress, you are permanently on call and can't just switch off. You also need to recover your initial franchise investment over the period. So if it is 7 years, you need to substract $17,000 per year from that figure which leaves you with $51,000. Over 80 hour weeks, you would be earning $12 per hour!

Or you can keep your investment in your pocket, get a job for a 35 -40 hour week that pays $60-$70,000 per year and go home and enjoy your family and your life. You see in a franchise the income does not match the amount of work you are required to do. Nowhere near it. Investing in a franchise is not only extremely risky, but offers very little return even if successful.

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