I was sitting here at work thinking about how much I would rather do something else and it hit me... What about franchising? Has anyone here tried it? The UPS Store looks like it could be around a while. Of course I'm not going to drop everything and throw money into something that I'm not prepared for. I'm interested in some feedback on it. Thanks
ive been wanting to do this as well, maybe a few small fast food places... feedback would be appreciated
Well, let's see... You need a lot of seed money to get started, and forget about bank financing unless you want to play a jacked up interest rate. Franchises usually have tons of overhead and have low profit margins, unless you have multiple units. You have to deal with low skilled, minimum wage employees with high employee turnover Long hours. Since you will deal mainly with the public, you have to keep the store open into the night to accomodate people that can't come by during normal work hours. You still have to deal with all the corporate BS associated from the franchiser as you would with any other job. If you do franchise, might I suggest Auntie Anne's Pretzels or Cinnabon? With a clutchfans discount, of course.
Try your friend Google... For instance, this site tells you that if you wanted to open, say, a wings joint, you would need a $25k franchise fee, $60-75K in cash, a $189-249K investment, and a net worth of $200k to get a store going. http://www.franchise.com/franchises/WingZone.html
All true points.... OTOH, franchising allows you to fairly easily become an entreprenuer while minimizing associated risks - the risk of opening up a franchise and losing your shirt is a lot less than just randomly opening up a restaurant, or post-office store, or [fill in the blank]. If you do open a franchise, from a financial perspective, there is absolutely nothing more important than unit economics. Look at average unit volumes and margins compared with build-out costs. The higher of the first and the lower of the second, the better the potential opportunity.
So what if you wanted to start up your own restaurant that would eventually become a franchise? My friend has a great fast-food idea and I have encouraged him to seek it out. Do you still face the battle that A-Train has listed?
I've always wanted to open up a papa johns and then after that is established, open up a high end pizza shop, selling like crazy goat cheese pizzas and other fancy high quality pizzas BUT, minimum net worth requirement is 250K. It will take me 10 years of hard saving to get that, AND then you need another 250K cash per store.
There are a lot of sites that list businesses for sale. You should check those out as well. I've seen a few of those UPS stores for sale and some go out of business, so I'm not sure that would be the best way to go. OTOH: I used to eat at this place and it was always great. http://www.steamboatbills.com/franchise_info.htm I also once talked to Krispy Kreme about a store but they'd already sold the rights to my area.
I've also contemplated this. I've had experience w/ franchises before, and there's a lot to positives and negatives to weigh. One thing that really stands out is you're under constant scrutiny from the franchise. They'll make sure you're always meeting standards, and at a snap of the finger they may request you to change many things. Meaning your costs for the month have just gone through the roof, whether you want to or not. You'll be stuck buying your supplies from the franchise, so you won't be able to bargain or shop around. And the actual franchise costs you'll pay (most likely % of your profit?) aren't going to feel so good. It's part of the deal going in, and you've accepted it, but I assure you the first month you actually look at your profits and then realize you've got to split the pie it's not that easy But the monster benefit of calling your place McDonald's instead of McProfessorJay (not catchy enough?) is assuring you of an already established customer base. It's definitely less risk customer wise. How often do you see franchises that open up and go out of business in a few years compared to independents? Just remember, you're not totally the boss. As for the things A-Train mentioned employee-wise and the long hours, I think that goes w/ the territory of opening up your own business, franchise or not.
Postal Franchises: http://www.certifiedbb.com/bin/detail.asp?Profile=6486&tab=buss - Discretionary earnings are poor. http://www.certifiedbb.com/bin/detail.asp?Profile=5781&tab=buss - A little better. http://www.dellingco.com/busforsale.cfm - One listed on this page, but recently sold http://www.sunbelttexas.com/listings/view.asp?listing=811562 - looks to have zero cash flow.
Someone here I think (heypartner? Fatty?) Was looking into starting up a BW3 before they started popping up around town. You have to start with 2 locations, if I remember correctly. I don't know how or why I remembered that.
Franchises cost more to start than regular small business and the upside is less because of all the fees. The advantage is that it reduces risks and mistakes. Most fast food franchises start at 100K in fees only. This does not include store front costs. Franchises costs a lot of money.
