Fast food franchises?

[wazup]

Does anyone know anyone that ever owned one, looking at Dominos in peticular. I know franchises have their drawbacks, like slave to the franchise, franchise fees, high start up costs etc. I'm also worried about finding good help, since they wouldn't be very high paying jobs.

The benefits are that the business should make money right away, advertising looked after, and should be worth something when paid off. What's a business like this usually sell for, is it a %age of revenue. Any info would help. Life's kind of hit a rough spot, not much going on.

 

[afterhours]

I was looking at Mr. Transmission. Seems like a hell of a gig. They charge kinda like lawyers - first they take some money to open your shit up, then you are kinda into it (while you still have no clue what the hell is really going on with your tranny as it's too complicated), and they bleed you at a rate of 80% from the dealers price. And they don't report to law society.

 

[Yoga Face]

Have thought of it and gone to trade shows

It seems to me it favors the franchiser in an extremely lopsided way

If it was such a great idea then why does the franchiser put up the risk capitol ?

There are so many to choose from how do you choose the right one ?

Remember they wrote the contract and they got the lawyers that wrote it

 

[cute-bald]

All good points. Stay far away. You are paying for a middle class job. In all of them you will earn about 50-60K at best. You will have a boss ( area/district supervisor). You will work your ass off for that 60k for which you risked your investment & all your assests as collateral ( incl. your house). If you want out, they set the selling price & make it bloody hard to find a buyer. I have a friend who is a senior exec. in business banking at major bank. Says nothing but grief for those suckered into " the dream". If you do not want the unsertainty of starting your own biz. then know what type of biz. you like. Keep checking the icx listings for private ones for sale that are established. Much cheaper in the end as well & not the big grief of the franchises.

 

[weekend_guy]

And the way those contracts are written, it's next to impossible to succeed if you're a short, bald man.

 

[spraggamuffin]

Was looking into a subway franchise some years ago but never went far with it once I realized they were popping up everywhere. A friend of mine got a bargain price on a pizza franchise when an old owner was retiring. They saved about $25G compared to starting fresh with one from the franchisor.

Look out not only for franchise royalty fees,but also a franchise that expect you to purchase everything from them even though you know you could get it elsewhere cheaper.

My friend had to purchase the dough,sauce and cheese from the franchisor(to protect the trade secrets etc) but had the choice of where they bought their drinks and vegetables from. Think they bought veggies from AJ Lanzerrota.

Their family worked hard in the business and it paid off. They sold the franchise after about 5 or 6 years at a profit and upgraded to a more expensive franchise.

Having immigrated here and not up to speed on how business is done in Canada, my friend found going the franchise way helped teach them a lot of how business is run in Canada and saved them the headaches of all the stuff the franchisor takes care off that they would have had problems with.

With franchises you are really still working for someone but do have lots of autonomy. You can learn a lot which you may be able to apply to your own "from the ground up" venture and so reap the benefits 100%.

 

[Keebler Elf]

All of that's true to some extent but going into a franchise may make sense if you don't know the business. There's a lot of help available and a lot is done for you with a franchise (think about advertising costs you don't have to pay, at least not directly). It's a less risky than going the independent route.

It may be worth opening a franchise for 10 years and then going your own way once you've learned the ropes.

One thing's for certain, you can bet dollars to donuts that the failure rate on a franchise fast food restaurant is several orders of magnitude less than an independent restaurant.

 

[Yoga Face]

Getting solid advice is the hard part

It seems to me contact franchise lawyers and accoutants for independent advice

Asking franchise owners may not be the best as they would not like to admit a mistake

At the very least I would work at one before deciding

 

[Nickelodeon]

Lot of millionaire McDonalds and Timmiesn franchise holders. Less so Shoppers Drug Mart.

 

[Yoga Face]

Lot of millionaire McDonalds and Timmiesn franchise holders. Less so Shoppers Drug Mart.

How do you know this ?

It costs big $$$$$$$$$$$ to buy those franchises if you can get one

That is a lot of money to lose and the belief these franchioses are bullet proof is nonsense

 

[Ceiling Cat]

* FYI *
Did you know that if you have a sucessfull Subway franchise and I wanted to set up within seeing distace down the street, Subway Corp. will allow me to do so. Subways have no territory protection. One way to find out if buying a franchise is a good idea is to visit existing franchises and see if they will sell out to you, that way you can see if existing franchisors are trying to get out. I know a guy that was interested in buying a Subway franchise, and the sales rep told him that there was 4 existing franchises up for sale. Rather than having them close up, Subway Corp was trying to keep them going at the expense of anyone interested in buying up the shops.

With the $5 sub promos, I do not thing sub shops are doing well.

 

[cute-bald]

You learn alot buying an established independent successful biz. You will have more imput in all aspects of the operations. Typical buying agreement has owner train & transition for atleat 6months. You do NOT become a millionaire from owning 1 franscise unit such as timmies. You will make 60K or so running it. IF you own many & hire a manager at each & pocket 20-30k at each unit THEN having say 10 stores earns you 300K+ a year. Otherwise you just bought a job, risking your own capital & working your ass off.

 

[Yoga Face]

You learn alto buying an established independent successful biz. You will have more imput in all aspects of the operations. Typical buying agreement has owner train & transition for atleat 6months. You do NOT become a millionaire from owning 1 franscise unit such as timmies. You will make 60K or so running it. IF you own many & hire a manager at each & pocket 20-30k at each unit THEN having say 10 stores earns you 300K+ a year. Otherwise you just bought a job, risking your own capital & working your ass off.

And you risked your life savings for the privilege !



So if you are left with 60 K after payments then have you have made more than 60K because you have also paid down the mortgage ?

Then once mortgage is paid off you have the value of your franchise as a return on your investment and you are now making 100 K plus any additional capitol gains minus loss of intertest of money invested correct ?

How does one figure out this is a smart move

It seems to me the value of your franchise after you have paid off the mortgage is just as important as your yearly profit

How could you possibly calculate that ?

 

[COMMANDER KIRK]

My understanding is that most franchise agreements are licenses for a certain period of time, and then need to be renewed, for an additional fee. Usually the physical plant is not owned by the franchisee, but leased, often from the franchisor. There are definite advantages and definite disadvantages of purchasing a franchise.

 

[wazup]

My understanding is that most franchise agreements are licenses for a certain period of time, and then need to be renewed, for an additional fee. Usually the physical plant is not owned by the franchisee, but leased, often from the franchisor. There are definite advantages and definite disadvantages of purchasing a franchise.

Your understanding is that you're wrong. The whole idea of a franchise for most is to start out working there alot, find a couple reliable employees to hopefully cut back on your hours, make a decent wage, and then build up enough business to make a nice profit when it's paid for and you try to sell it.

It's not a great life, but for someone with no pension, it's an option as a fairly quick way to make some money. Most buy them for the sole purpose of selling them down the road.

 

[COMMANDER KIRK]

Your understanding is that you're wrong. The whole idea of a franchise for most is to start out working there alot, find a couple reliable employees to hopefully cut back on your hours, make a decent wage, and then build up enough business to make a nice profit when it's paid for and you try to sell it.

It's not a great life, but for someone with no pension, it's an option as a fairly quick way to make some money. Most buy them for the sole purpose of selling them down the road.

You have strong opinions. How many franchise agreements have you reviewed?

 

[juanbrujo]

You learn alot buying an established independent successful biz. You will have more imput in all aspects of the operations. Typical buying agreement has owner train & transition for atleat 6months. You do NOT become a millionaire from owning 1 franscise unit such as timmies. You will make 60K or so running it. IF you own many & hire a manager at each & pocket 20-30k at each unit THEN having say 10 stores earns you 300K+ a year. Otherwise you just bought a job, risking your own capital & working your ass off.

However you can only make the 300k if you're tall. If you're short you can probably make only 20k. Correct cure-bald?

 

[wazup]

You have strong opinions. How many franchise agreements have you reviewed?

The franchisor never or rarely owns the building, and once the franchise fee is paid, the only fees left to pay are royalties, so you were wrong on both parts.

 

[Nickelodeon]

How do you know this ?

It costs big $$$$$$$$$$$ to buy those franchises if you can get one

That is a lot of money to lose and the belief these franchioses are bullet proof is nonsense

I know because i've worked there and I wasn't serving burgers or coffee.

 

[wazup]

I know because i've worked there and I wasn't serving burgers or coffee.

McD's and Tim's also have drive thru's, which the others don't, like Subway.