Experience with Franchises?

[asphaltgambler]

Read an article last night; local rag profiling several local people who have left their employers to find a better opportunity with franchises in this economy. One couple started opened a Little Ceasar's, one a Popeye's, etc.

The whole article profiled 5 people, all but one starting brand new brick and mortar, businesses. All less than a year old.

I get the positive reasons, proven business plans, marketing, branding, etc. BUT my understanding is that most of these gleen 3-6% off of GROSS sales, + annual/monthly fees, advertising fees, etc.

Seems to me thst most are only making money for the franchisor. I have also seen many (fast food mostly) in my area go under.

Anyone here have direct/indirect experience and want to chime in??

[stomachmonkey]

Most people I encountered who make good coin with franchises own multiple locations.

And they work their asses off to get them up and running.

YMMV

[krystar]

i dunno how but Indians are popping up with Subways EVERYWHERE here. must be making good money.

[LeeH]

Some franchises make great money, but many times it's like buying a $35K/year job. My next door neighbors bought a Quiznos, but hired a manager. Best I could tell they pretty much broke even. And that was a good location. Many Quiznos franchisees sued the company.

If you can work round the clock and do it all yourself you might make a living. But if you have that kind of work ethic then you can get a job doing the same work and not risk your life savings.

[Rick Lee]

I would think Dunkin Donuts has to be good. They are few and far between in the Phoenix area. The closest one to my house is about 10 miles away and I still make a special trip there once in a while. And there's always a line when I'm there. I don't know how their franchise/business model works. But they sure seem busy and sought after.

[QueenCity911]

I am the Franchisor of a home-based service franchise called Window Genie. Our closest location to you is in Richmond, VA. and we are at Window Genie Home Services | Window Cleaning - Window Tinting - Pressure Washing

There are LOTS of reasons why a franchise can make sense over trying from scratch or on your own. It really depends on what you want from a business, your investment, etc.

Even though all franchises have related fees, a solid franchise should have a history that shows a profit margin that justifies the investment and continued collaboration.

Not all are created equal, thats what you have to be careful of. Any particular deal may or may not make sense to the potential buyer.

Feel free to PM me or email at rik@windowgenie.com

Although I just purchased a loaded 2008 GT3 RS, my franchise owners are buying nice stuff as well..... More than enough money to go around for everyone when you work hard!!

[McLovin]

It all depends on the business and the area. Some can be great, others drive you to Bky.

The great ones tend to be harder to get. For example, my understanding is 5 Guys Burgers have all done very well, but they are difficult to get.

I knew someone who owned 15 Subways in Connecticut, he did very well with them, although it was a lot of work.

I also know that a few years back, the franchisee of all of the Burger Kings in a big city in Texas (I think it was 25+ restaurants owned by one person) went under.

So, like any biz, there is no general answer.

My neighbor opened some kind of PO Box/mail franchise a few years ago. It was one of those places that has po boxes, sells stamps, ships boxes, etc. It worked out very badly for him. Many years of really hard work, fighting with the unreasonable franchisor, long hours, all to just lose money. He eventually had to sell his house and move to some lower cost housing area like Phoenix, just to survive.

One thing about owning a franchise, in many ways you are just an employee of the franchisor. Generally, they will tell you what you will buy, the price you will buy it at, the price you will sell it at, when and how much you will spend on the business and improving your facilities, etc. etc. etc.

[stomachmonkey]

Originally Posted by McLovin

One thing about owning a franchise, in many ways you are just an employee of the franchisor. Generally, they will tell you what you will buy, the price you will buy it at, the price you will sell it at, when and how much you will spend on the business and improving your facilities, etc. etc. etc.

Reminds me of my friend Tim who took over a Shell Gas/Service business.

Captive audience in a very affluent town but Shell drove him insane.

Tim used to gas up his personal vehicles from a competitor in a nearby town because it was cheaper than pumping his own product.

Took him a couple of years but he managed to buy out of the Shell contract and he's making a very nice living now.

[Dottore]

I think it must be truly soul destroying to have the Franchisor constantly jerk your chain while you assume all the risk trying to sell enough of some god-awful product or service on paper-thin margins in order to make a living.

Unless perhaps you have a combination of product and high traffic location that sells itself.
I know a guy for example who owns two great DQ franchises in the US and apparently makes enough $$ off these to live a very gentlemanly life by the Italian lakes.

[Zeke]

I sat in on a franchise seminar designed to sell me one. They can be very convincing with their brand recognition schpeel ad nauseum. Then they get into how well they can organize you for your day to day business chores, like bookkeeping. When you go out on your own to do some research you find that more franchises fail than succeed. The chances are better with the well established ones, but as mentioned, they can be hard to buy and will be expensive.

+1 on long hours and dedication. So what's new?

Oh, and the one I considered? Mr. Build. Totally gone today.

[Rick Lee]

I see ads for Snap-On franchises all the time. I called about one of them and the min. cash investment is $50k before you even talk about financing. But I've heard those owners/drivers make over $100k a year in personal income. I got talking with the owner of a local UPS store and he said he had to pay them $7k upfront just to even start a discussion on opening a franchise. I've heard McDonald's will only let former employees buy franchises and it's a min. $500k cash investment.

[porsche4life]

You ought to see all the BS you have to put up with to be a radioshack....

[asphaltgambler]

I can tell you from experience that Snap-on tool Franchise is a poor investment, domino effect from the auto repair industry capsizing. Techs that have No/low work load, no money, therefor no one buys tools, even if they need to,. Plus the current young generation of 'techs' are more interested in shiny tool boxes, smart phones, electronic devices (that have nothing to do with the business) than buying hand tools which have the highest mark up.

Also the GROSS margin is @38% and the dealer/franchisee holds the paper on most tool purchases $1K and under. So 38% AND waiting 12-15 weeks to collect, you are also responsible for collections where larger $$$ are financed by corporate. THESE accounts must be at least 90% current or your cost to finance future purchases goes up.

Snap-on corporate has had several class-action lawsuits by their dealers. MAC tools are the hands down worst because they have been bought and sold multiple times over a 15 yr period. That brand has become so diluted and overpriced no one buys their tools anymore.

[Rick Lee]

I thought the car repair biz was doing well because the economy is making people keep their cars longer. No?

[asphaltgambler]

Everyone seems to think that - but no. Most of my customers (Euro) basically can not afford to properly repair and maintain their cars. They are keeping them longer but not fixing them, or just barely so. Many time;s when they do, I pull the veh in and it is so low on gas I refuse to test drive because I know it will not make my 10 miler test w/o running out. Ask me how I know!

[Racerbvd]

Having had A BIT OF experience (we owned a few BITD) in this and a have friends who own large brand named ones.
A few things are very important, most is location, the 2nd (having the $$ to operate is a given) is "Protected Territory”{this is where Snap-On stared screwing their people, I too looked into it years ago which should include more than just other stores, but if a certain Product is the draw, if the company starts offering that product through other outlets, you can be screwed, this happened to us with Tempurpedic and to Schwinn bicycles.


One friend is about to open a Krystal, here is the info.

How much does it cost to open a Krystal Restaurants Franchise?

Total Investment: $900,000-$1,300,000
Initial Franchise Fee: $32,500
Royalty Fee: 4.5%
Advertising Fee:
Term of Agreement: 20 years
Renewal Fee: $8.1K

We looked into Fatburger, but nothing in FL was open.

Name of Franchisor:
Fatburger North America, Inc.

Description of Business:
Quick casual, take-out & sit down hamburger restaurant.

Distinctive Features:
Fresh, 100% pure lean beef burgers, grilled in front of our customers. Large portions and distinctive seasonings. Classic rhythm & blues; oldies music theme.

Signature Products:
Fatburger hamburgers served with a wide assortment of fresh condiments; chili; chili dogs; steak fries; fresh cut onion rings; real hand-scooped ice cream shakes.

Year Founded:
1952

Franchising Since:
1990

Total Units :
97 units

Company Owned Units:
29 units

Franchised Units:
68 units

Geographic Distribution:
California, Nevada, Arizona, Washington, Florida, Colorado, New Jersey, New York, Georgia, Illinois, Maryland, Michigan, Nebraska, Ohio and internationally in Canada, Dubai, Hong Kong, Macao and Jakarta.

U.S. Franchise Fee:
$50,000

International Franchise Fee:
Varies by region, market size, and development term.

Royalty Fee:
6% of net sales.

Advertising Fee:
Franchisees must presently contribute up to 1.75% of net sales to the national or international marketing budget, as well as spend at least 2.25% of net sales on local marketing.

Total Required Investment:
Approximately $504,000 to $881,000 per unit.

International costs are similar to the U.S., however may vary with the local economy.

Company strongly prefers potential franchisees and joint venture partners interested in multi-unit agreements.

Contact:

You need to decide what you want to do, how much time & $$$ you are willing to invest and if you really want to be married to a business..
http://www.franchise.com/
Some times you can get a good deal from someone who already has one, but for what ever reason can't make it work..
http://www.franchiseforsale.com/

[stomachmonkey]

We should be more like China.

Just knock off the decor, put the logo on t-shirts and sell someone else's product while pretending to be them.

[grendiers]

We own a seasonal pizza restaurant on our 50 acre hobby farm in Wisconsin. Work 5.5 months, play at our NM house for 6.5 months. Enough income to support car habit, and house rehab project (Wife's hobby!) in New Mexico. Looking to sell, very successful operation, local, hard working farm kids basically run the place. 30x60 machine shed with concrete floor and new BenPak car lift included. (carrot dangling!).

Not a franchise, so sorry for the thread hijack! Lots of potential for weddings, group events, bed and breakfast, etc.

PM me if interested.

[peppy]

My family has had Tastee Freez franchises for about 40 years. They are not the biggest or best , but the fees are not bad and they still have a good product.

We are allowed a bit of leeway in our menu and being a franchisee helps with purchasing (printed cups, wraps, and bags).

I had one location go under and that was due to me not doing due diligence with an easement that WalMart had across part of my parking lot. We started out with 50+ parking spaces and ended up with 8.

[Rick Lee]

I love Tastee Freez, though I really hate the way all these places mess with the spelling of the words in their names. It's not as bad anymore thanks to Google, but it used to be a pain to find in the phone book. Why can't kwik just be spelled quick?