to buy or not to buy a franchise

[Yoga Face]

fran·chis·ee

One that has been granted the right by a corporation to sell its product or service within a particular area.


fran·chis·er or fran·chi·sor


A corporation that grants a franchise, as to a franchisee



It seems to me the franchisee sign the mortgage thereby taking all the risk

should not the franchiser take the risk of signing the mortgage as it is his idea and he sets the rules and makes all the business decisions


If franchisor fucks up franchisee can then walk scott free. The time the franchise has put, and now lost, is enough pain for the small guy.

I mean fuck, franchisor writes a contract, written by their lawyers, that you have to sign. WHAT FUCKING CHANCE YOU GOT IF THINGS GO SOUTH

Seems like a huge risk

Some get lucky when they bought a Tim Hortons , but to buy a Tim Hortons today you are looking at many, many years to get your investment back

Ten years from now Tim Horton's could be toast

 

[wazup]

Franchisee should take all the risk, to get to the franchising stage the business has already been proven successful. If the franchisee turns out to be a shithead, it's on themselves. Franchisor has already taken years of long hours and risk to prove the brand works.

A good franchise can eliminate years of growing pains from that a start up would go through. Did the franchisor knock on your door or harass you with phone calls to buy in or did you initiate interest (you did), so why would it be any different than starting your own business.

 

[explorerzip]

You're buying yourself a job if you decide to buy a franchise. I do know someone that owns a successful Boston Pizza franchise, but they work there ass off and they started branching out into other businesses.

 

[Ceiling Cat]

Do not buy a Subway franchise, I hear business is way down these days.

 

[buttercup]

If you don't like the terms of the franchise, don't buy one. What else do you want your remedy to be?

They're not going to change their practices to suit you. If they needed to ease the restrictions in order to attract more franchisees, and make more money, they would do so.

 

[explorerzip]

Do not buy a Subway franchise, I hear business is way down these days.

Too many locations maybe?

 

[eldoguy]

Too many locations maybe?

No territory restrictions!

 

[explorerzip]

No territory restrictions!

AFAIK, Stabucks stores are corporate owned, which is why you have stores directly across the street from each other. I guess this would not work in a franchise model.

 

[9413]

I think nowadays, Mcdonald is the only franchise that's busy all day long, not even Timmy's. I don't know what the cost or profit on all the franchise but I think most of them are going downhill because the way people spend money have changed, especially on franchise fast food.

 

[Titalian]

All I'm going to say to this is, there's a lot of work involved during the start up, so you better have the cash up front to support yourself.
I hope people realise that there easier ways of making money. Jmt. Keep in mind that as franchises grow, so do the fees.

Here's an interesting Forbes article on franchises.
http://www.entrepreneur.com/franchise500/

 

[TeasePlease]

Too many locations maybe?

Or because it's a one trick pony with a now-admitted peso for a former front man?

 

[Smallcock]

Franchisees would probably reply to this thread but they can't find the time away from duties at the store.

The fat cats who have been long established owners of big brands like McDonald's and got in early before timmies blew up also have no time to chime in because they're traveling the world enjoying their money.

The food service business is probably more competitive now than ever. Many big brands are struggling to expand and lots of new brands are popping up competing for market share - some offering the same burgers and fries; others trying to get a lock on the healthy eating demographic.

 

[DanJ]

A lot of these companies not only make their money from the fees the franchise pays. but off of supplying that franchise as well. You don't have the freedom to shop locally and make deals to save yourself money. You might not even be allowed to buy toilet paper because the parent company requires you to buy that from them. On the other hand, while it might cost you half a million dollars or more to open that Subway, you have instant brand recognition and a much greater chance at success than if you lease that space yourself and open your own sandwich shop. However if you are willing to take the risk, then you might do very well for yourself on your own as well and not have to make as much money to service the debt you likely have from that upfront franchise cost.

 

[Yoga Face]

If the franchisee turns out to be a shithead, it's on themselves..

no, they can take franchise back IE fire the franchisee like any other employee

has already taken years of long hours and risk to prove the brand works. .

true

so why would it be any different than starting your own business.

because you share the profit and they make all the rules

 

[Cassini]

A lot of these companies not only make their money from the fees the franchise pays. but off of supplying that franchise as well. You don't have the freedom to shop locally and make deals to save yourself money. You might not even be allowed to buy toilet paper because the parent company requires you to buy that from them. On the other hand, while it might cost you half a million dollars or more to open that Subway, you have instant brand recognition and a much greater chance at success than if you lease that space yourself and open your own sandwich shop. However if you are willing to take the risk, then you might do very well for yourself on your own as well and not have to make as much money to service the debt you likely have from that upfront franchise cost.

Pizza-Pizza is notorious for making there money off the franchisee via supply agreements.

I would avoid any franchisor that requires access to the franchisee's bank account, or can unilaterally charge fees to the franchisee. Every so often, a franchisor goes bankrupt. In that case, as the franchisee, you want to have the ability to protect your assets.

 

[Big Rig]

In a franchises you have just bought a job with long hours and a lot of stress. My feeling is the franchisor keeps the percentages at such a rate it prevents the franchisee from getting wealthy. I would want to see six figures, after building franchise, with less hours and a good retirement package when I sell the franchise. The risk alone keeps me away. Franchisor fucks up and you lose all.

 

[bluecolt]

As a accountant, I have extensive knowledge of franchise operations. Many are not worth squat. There are a few franchises that are actually worthwhile but are extremely expensive. I would put Tim Hortons, Harvey's, McDonalds and possibly A & W in the mix. Some of the service franchises such as the various plumbing franchises are also not too bad. Of the dry goods franchises, discount shoes seem to work well.

No franchises operations are truly owned by the franchisee. In a good operation, the franchisor dictates all that you do, sell and buy. You really are their manager and pseudo employee and they have you by the nuts. As a result, the franchisor will generally make more than you do when you add up their royalties (generally from 4% to 7% of gross sales), advertising charges (1.5% to 2.5%) and rent (usually higher than market value). Additionally, you are obligated to work under their conditions, i.e. hours, holidays, etc. and to buy almost everything from their designated suppliers at fairly high prices. For example, for one of the aforementioned franchises, they must buy everything from the designated suppliers except for plastic forks, spoons, knives and napkins. There are no volume discounts or spiffs of any kind. The deals are usually absorbed at the corporate level by the franchisor.

If you have the dough (hundreds of thousands of dollars) and you don't mind the franchisor oversight, and, you have a solid work ethic and don't mind gruelling labour and hours, it can be rewarding after a few years. You will only get rich if you own multiple units and can handle them all properly.

 

[Smallcock]

As a accountant, I have extensive knowledge of franchise operations. Many are not worth squat. There are a few franchises that are actually worthwhile but are extremely expensive. I would put Tim Hortons, Harvey's, McDonalds and possibly A & W in the mix. Some of the service franchises such as the various plumbing franchises are also not too bad. Of the dry goods franchises, discount shoes seem to work well.

No franchises operations are truly owned by the franchisee. In a good operation, the franchisor dictates all that you do, sell and buy. You really are their manager and pseudo employee and they have you by the nuts. As a result, the franchisor will generally make more than you do when you add up their royalties (generally from 4% to 7% of gross sales), advertising charges (1.5% to 2.5%) and rent (usually higher than market value). Additionally, you are obligated to work under their conditions, i.e. hours, holidays, etc. and to buy almost everything from their designated suppliers at fairly high prices. For example, for one of the aforementioned franchises, they must buy everything from the designated suppliers except for plastic forks, spoons, knives and napkins. There are no volume discounts or spiffs of any kind. The deals are usually absorbed at the corporate level by the franchisor.

If you have the dough (hundreds of thousands of dollars) and you don't mind the franchisor oversight, and, you have a solid work ethic and don't mind gruelling labour and hours, it can be rewarding after a few years. You will only get rich if you own multiple units and can handle them all properly.

Also, when it comes to Tim Hortons and McDonald's not only is the cost of entry staggering, but even if you have the money to put up, first dibs on new locations (and old ones up for sale) go to existing franchisees.

 

[Smallcock]

On the other hand, while it might cost you half a million dollars or more to open that Subway, you have instant brand recognition and a much greater chance at succes.

After a cursory look at franchises a few years back, I noticed that the vast majority, including Subway, are relatively cheap to buy (nowhere near half a million). It says a lot about the changing landscape of the food industry.

The few brands that cost a lot (like McDonalds) and have extensive training (something like 2 years) as barriers to entry exist because they are the brands that make real $$$.

 

[Yoga Face]

.

If you have the dough (hundreds of thousands of dollars) and you don't mind the franchisor oversight, and, you have a solid work ethic and don't mind gruelling labour and hours, it can be rewarding after a few years. You will only get rich if you own multiple units and can handle them all properly.

Exactly

Royalties are geared to ensure you do not become wealthy

For all that risk and effort I would expect potential wealth from one franchise and it is not there

Getting advice from an accountant who specializes in franchises seems like a great idea