Are you tired of taking orders from higher-ups? Are you sure you could do a better job than your boss? Does the idea of introducing yourself as an owner sound appealing?
You might have the makings of an entrepreneur.
If you think having no business experience and no clue where to start is a problem, a franchise may be the solution.
A franchise is essentially a ready-made business. The franchisor — the company that grants you a franchise — gives you the product and trains you.
As a franchisee, you can focus your energy in an area that interests you. Franchises exist in every sector, including convenience stores, fitness centers, hair salons, restaurants, bars and car washes, to name just a few.
You need to come up with the cash to buy into the business, but when you invest, at least you know that the business model has worked elsewhere.
I talked with Devin Conner, a consultant with Franchise Marketing Systems, to give Money Talks News readers the skinny on the world of franchises.
Let’s start with the benefits of owning a franchise, which include:
1. You can piggyback on others’ success
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A franchise is essentially a ready-made business. In exchange for your investment, the franchisor gives you a proven product and often provides training and advertising. Sometimes it also assigns you a location.
Your contribution: time, money and labor.
2. You can choose from various business types
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Whether you want to open a hotel or offer in-home care for seniors, there is a franchise for you. Franchise Marketing Systems reports there are an estimated 3,000 franchisors in the U.S.
Here are the top five in Entrepreneur Magazine’s Annual Franchise 500 rankings for 2017, and the initial investment required:
- 7-Eleven: $37,000 to $1.6 million
- McDonald’s: $1 million to $2.2 million
- Dunkin’ Donuts: $229,000 to $1.7 million
- The UPS Store: $178,000 to $403,000
- Jimmy John’s:: $326,000 to $555,000
Not sure how to come up with that kind of money? Money Talks News founder Stacy Johnson offers up his advice in “Ask Stacy: Where Do I Find the Money to Start a Business?”
Franchise business owners can choose to go with a new company or an established brand. Established companies may have a more polished plan, greater customer base and a proven track record to offer to its franchisees. On the other hand, new franchisors may be especially invested in ensuring their first few franchises succeed. That could mean more one-on-one attention and assistance in getting your business off the ground.
Conner says there are three things to look for in a franchise business:
- A strong vision from the franchisor
- Strong training support
- Firm boundaries between franchisors and franchisees
“Sometimes you see franchisors who have trouble taking themselves out of the business,” Conner says about that last point.
3. No business background? No problem
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One of the biggest benefits of a franchise is that it offers a turnkey way to start a business. New owners don’t need an MBA either.
The first step to becoming a franchise owner is to contact companies that interest you. Typically, you’ll spend a full day getting a feel for a company, and then your financials and background will be vetted. If everything checks out, you’ll be formally presented with a franchise agreement.
“Having some business background would absolutely help,” Conner says, “[but] if the franchise is put together correctly, anyone should be able to figure it out.”
4. You can earn a decent income
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You may not get rich, but the chances are you’ll make a decent living. Franchise owners, on average, earn $60,000 a year, according to the jobs website CareerBliss.
Of course, that means many franchise owners make more — and many make less. For example, Dunkin’ Donuts owners earn $124,000 a year, on average, while Bonus Building Care owners earn $23,000, according to CareerBliss data.
5. You’ll enjoy training and support
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A good franchisor should provide assistance with:
- Daily operations
- Location scouting
- Customer base development
- Market analysis
This isn’t to say a franchise owner simply has to show up and count the money. Owners are responsible for growing their businesses, but franchisors should provide blueprints to make that growth happen.
“You don’t have to figure out the market on your own,” Conner says.
6. It can be fun
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Entrepreneur Magazine ranked Anytime Fitness as the nation’s 14th top franchise in 2017.
Brian Kleinschmidt, who owns several Anytime Fitness franchises in the Tampa, Florida, area, offers this advice: Finding a business you love will help you succeed.
He, for instance, loves watching customers become healthier and stronger.
“I’ve got a lady at one of my gyms, she’s lost 200-plus pounds, and to see someone genuinely not only change their life but save their life, is the reason I got into this business,” Kleinschmidt tells Money Talks News. “It’s more about people than it is profits. But the profits come if you take care of the people.”