Franchising, which is the business model of recreating a successful traditional businesses to multiple locations, by empowering multiple small entrepreneurs, providing them with proven methods, products and systems, has clearly transformed our high street, culture and even our diets.
At a glance, franchises seem to offer the perfect self employment solution. The franchisor does a feasibility study, approves a store location, fits the establishment out, trains the staff, supplies the raw materials / stock, and puts in a quality control process.
Franchises have all the systems in place to recreate a successful business.
KFC, Burger King, McDonalds are all examples of successful franchisors, their processes are so rigorously tested and refined that an entire restaurant can be operated by teenagers. The food tastes exactly the same in these restaurants in any country you go to, and customers can rely on that, it’s a proven formula.
The fact is, if you want as close as possible to an iron clad guarantee of success on the high street these days , it has to be a franchise.
I read about a couple that bought a franchise for a lot of money they had to borrow from the bank and pay back with the interest added. They were very excited the day the restaurant opened six years ago. I will not mention the brand but it has a lot to do with chicken. Their take away took a while to get going. After two years, they started to be able to draw a salary, it was year four, before they were finally able to afford to take a holiday.
The real problem was in their fifth year when they discovered they were due for an upgrade. The upgrade was compulsory as far as the franchisor was concerned. The franchisor had tweaked the brand and they had to close for a fortnight. Shop fittings had to be removed and replaced, the cost of all this was huge, and this was the money they had managed to save for a house deposit.
The biggest problem with buying a franchise
The main problem with a franchise business is the amount of money you have to tie up and put at risk. If you want to open a restaurant with a well know franchise brand, you are going to be looking at investing in excess of £750,000 and possibly double that. Depending on which franchise you buy a stipulation may be that you don’t borrow that money.
Even some small vendor style franchise businesses can cost upwards of £20,000.
This unfortunately takes the majority of us regular folk out of the game.
Their is a way to get the same repeatable proven systems of the franchise model without the capital outlay.
There are many legitimate work from home business models, with long track records and excellent products, some of these products have been featured on television and in quality magazines.
Don’t let minimal set up costs and affordable license fees give you the impression that the profit level will be low. Many of the people who take these types of businesses as seriously as if they had spent £750,000 make a far better income than a McDonalds franchise owner.
If you wanted you could work less hours, or choose to work hard and make twice as much as a franchise owner. These innovative businesses have thrived in recent years as people search for a better work life balance.
Lastly many proponents of these home based business models are keen to remind people that they get paid royalties, or what they call residual income. This means that if they take large chunks of time off of work, they continue to get paid regardless.
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