Buying into a franchise

wuckfit

nkr_1234 wrote: »

You can try Subway Franchise since its requires under $200K investment. I know few people own 4 to 5 subway stores

I've done the sums. I can't see any benefit in a Subway franchise for anyone other than Subway. For a fraction of the outlay you could set up a sandwich business and keep all the profit. There was a thread about the franchise idea a few months ago.

wuckfit

paulwf wrote: »

There are plenty of people making good money out of franchises without working excessive hours.

There are far more making very little money, or a loss and working all the hours they can. In order to make a decent profit you need a massive turnover and several outlets. the outlay in order to achieve this is around easily £500k +, most of which you'll never see again. there are much eaiser ways of making money. ( such as selling franchises, not buying them )

paulwf

wuckfit wrote: »

There are far more making very little money, or a loss and working all the hours they can. In order to make a decent profit you need a massive turnover and several outlets. the outlay in order to achieve this is around easily £500k +, most of which you'll never see again. there are much eaiser ways of making money. ( such as selling franchises, not buying them )

I think the thread is this one:

https://forums.moneysavingexpert.com/discussion/2178353

Are you referring specifically to Subway? Personally I wouldn't touch a Subway franchise with a barge pole, but that hardly means that all franchises are bad. You do have to do a lot of research but there are some good ones about

Let's not forget that a large proportion of independently owned businesses fail, and I would estimate that half of the independent shops on my local high street aren't making their owners a comfortable income.

paulwf

millyfrancrisp wrote: »

I thought about the franchise option as well - I'm looking to get back into work after 6 years of being a full time mum.

I like the look of Pauline May ( specialist clothing for the elderly ). Does anyone have any experience of this company?

This is my take on it...I'm having to make some assumptions so please do thorough research and ask them any questions you have.

How their business model seems to work is a fairly straightforward wholesale-retail relationship. To state the obvious they make a profit by selling to you at wholesale price and you make a profit by selling at retail price. There doesn't appear to be much need for a franchise when I expect there are alternatives that work using the conventional wholesale-retail model or even just employ their own reps to visit care homes.

So that raises the first question - why franchise when a normal retail relationship would work?

Secondly we have to look at the size of the franchise fee - £25K ex VAT. If we are generous and assume the £5K of clothing is at trade price not retail then it is still £20K. That is a HUGE fee for a mobile clothing company.

One of the "rules" of ethical franchising is that the up front fee just covers the franchisors cost. They make money from the ongoing relationship where they have an incentive to see you succeed not by taking money off you up front.

So that raises the second question - what do you get for the rest of the £25K? The software, stationary and equipment doesn't have a huge value (they should actually be listing equipment costs separately). 20 appointments and 1 weeks training is worth something but I would say being vVERY generous all in the package is worth £5K excluding the stock.

So why would you pay them an extra £15K up front to sell their clothes? I can't see why you would do that when if you wanted to retail for another brand if you placed a large enough initial order they would give you point of sale material and training for free.

Pobby

I have done business with a couple of well know franchise companies. They cost a lot to start up and if it goes wrong, and I have seen that happen more than once, it is big bucks lost.

I have also seen the strain that some of the owners put them selves under.

markbrown

Hi,
In my opinion franchise business is the most successful business and at this time cleaning business is very appropriate for doing work.It odes not require prior business experience.Franchisers provide proper training and support to do work.Good franchise gave our brand name to attract more and more customer they you marketing strategy to work.
Thanks!

heretolearn_2

Some work well and are a good step into a business. Many don't. Do your research. Speak to existing franchisees and not just ones recommended by the company. Make sure it's a line of work you'll have the talent/skills/interest to do well in. Work out if you might just as well set up independently for yourself - what is the real benefit of buying this franchise? Don't do it just because you imagine it's safer or want them to hold your hand. You still need to do all the usual business planning work - is there a demand in the area, what is the competition, and so on.

ohdamnit

I have run a franchise for a smaller brand with my wife, the outlay around 15k in total. That got all the training, the operating model, support, and a fairly big area.

Was it really worth that much? No, it was likely worth around 5k.

After 3 years hard work the business had run a profit of about 15k, and we sold the business for about 7k.

The biggest killer for us was the ongoing fees as this amounted to about 15% of turnover when we work it out, and seriously ate into the profits (probably halving them).

I personally felt it wasn't a worthwhile franchise before we started out as the figures presented seemed overly optimistic to me. However I was encouraged to take the chance. Could it have been more of a money maker? Yes but personally I think we would have needed two or three franchises to make it worthwhile (which is what happened to the business).

Also remember that running a franchise is not the same as doing something you enjoy for work. Initially it can start out that way, but my recommendation would be to treat it as a business owner and you pay staff to do the end work for you, that is where you will need to progress to (i.e. employing people) to actually concentrate on growing the business and making money out of it.

inmypocketnottheirs

As paulwf comments at the end of his first post on this thread, buying a franchise is like buying a job. I thought long and hard about it, Subways, Costa Coffee etc etc and decided that the risks are far to high on myside and the rewards far too high on the franchisors. My advice ...... 'Don't do it!'

funkywhiteboy

I've only just started looking into buying a franchise, and would be doing so to actually buy work, but there is no guarantee of the work is there?! The prices of franchises vary wildly. A health brand name give you a few sachets of soluble powder and a satchel for £95, I could be a professional teeth whitener for £6K (rising to £20K for an "exclusive territory"), and repair scuffs and dents in cars for £30K with a lease of a vehicle for even more cash. After the initial excitement of owning a franchise it now seems insane to even contemplate it. I have no professional health experience, no professional cosmetic experience, and no professional vehicle repair/maintenance experience, yet I'd be professional after paying them? Well...

The risks look to far outweigh the possibilities (of breaking even), yet like I've said, I have considered it! I must be insane! But there are seemingly very few alternatives.