Post: #1

Was thinking of buying a business or franchise. I live in Phoenix. Thoughts on this?

Post: #2

Whilst I can't help much I can provide a few links. There is a client of company I work for that run an auto body repair franchise. The investment costs are about £20,000 and through reputation and goodwill many of the franchises work in cooperation of main dealers. I doubt you want to trade one corporate hellhole for another, as far as I'm aware the co has no plans on taking their services abroad. Although a higher investment on your part could change their mind.

I have prepared end of year accounts for a number of them. None have made a financial loss and the best performing one made in region of £45,000 profit before tax. They are UK based. If you want more information shoot a PM.

The link below has hundreds of different franchise opportunities to look through. See what interests you the most and go from there.


http://www.franchisedirect.co.uk

Post: #3

I am a franchisor.

If there's anything I can help with from the other side of the fence, let me know.

Post: #4

I don't have any experience in this per se, but do have some advice. If you buy a place, make sure it attracts the kind of people you'll want to be around for long periods of time.

Where I live in Maryland, there are these seasonal ice cream shops called Rita's. I've mentioned these places before on here. They're almost always staffed by hot young girls and they draw a crowd of fun-loving high schoolers and their equally fun-loving, upscale parents.

If I was going to buy a franchise, it would be this one or one like it. Going there would not seem like work. It would be like being in an '80s teen movie or an old Beach Boys song.

Conversely, the local Subway has always hired...um...let's just say "less attractive" folks. Their customers, meanwhile, all seem like angry, sour business people who are constantly in a rush and snippy with the staff. I despise going in there and couldn't imagine working a day there.

As for McDonald's, the less said the better. Be happy you don't have the cash to buy one.

As the years have gone by, I've learned to value quality of life. If it was me, I'd take less of a profit if it meant I was in an environment that was more pleasant and easy-on-the-eyes.

Yes, you could buy a place like Subway and try and "change the culture." But why put in that effort --especially when there are young, tanned blondes bending over to scoop ice cream at Rita's while wearing short shorts and tiny tank tops with plunging necklines?

Makes me salivate just to think about it.

Post: #5

If you have that kind of money to invest, hold on to it and start an auto glass replacement shop. They make bank and it is pretty much recession proof. Biggest mistake of my life was not getting into that 30 years ago. I would have been set for life.

Post: #6

Sorry to be a pest, but anyone else with any experience on this topic?

Post: #7

Most areas have small business round tables with other guys in your exact situation looking to franchise or start a business. I'd check out meetup.com or with your local chamber of commerce.

I've been to several of these meetings. They're full of old farts like yourself with a vast wealth of wisdom and experience.

Post: #8

(01-17-2016 07:59 PM)The Father Wrote:  Sorry to be a pest, but anyone else with any experience on this topic? I need to get out of corporate America...

1. Go through the Entrepreneur Magazine Franchise 500 list and pick one that you like. http://www.entrepreneur.com/franchise500

2. Then talk to local owners - not the corporate BD guys.

3. Rinse and repeat until the numbers look right.

Regarding Subway specifically, owners on franchise boards claim they can make around $50-75k per location per year...sometimes more depending on location. But the $5 footlong nonsense has taken a huge cut.

Same thing is happening to most food chains with their version of a Value Menu. Burger King franchisees sued corporate over it, saying they couldn't stay in business selling a $1 cheeseburger, but they lost.

So talking to the owners gives you inside info that the BD guys will lie about.

EDIT: BD = Business Development. Either regional managers or development agents - they're the salesmen from corporate who try to sell the franchise.

Post: #9

Don't do Subway. There is a reason it is rock bottom to jump in. The Corp meddles to much and dont grant you ant territory rights. So essentially you could open a shop and one could open literally across the street and the Corp won't care. The Corp handles almost everything and will send you whatever product I hear. They won't care if you already have a ton of suaces in stock, you can take more...

McDees is expensive but they are rolling out smaller McCafe location that will just have coffee, some breakfast options, and premium vegetarian options that can't be sold at regular locations. This might have a lower barrier to entry cost wise. Keep up on that is it is still testing.

Post: #10

The real money in franchises is when you have multiple. One of our clients has multiple McDonalds. He never has a problem paying a 20k legal bill. I'd assume it does pretty well.

Post: #11

I've heard good things about GNC if you can get a few of them turnkey.

Post: #12

(01-17-2016 09:01 PM)h3ltrsk3ltr Wrote:  I've heard good things about GNC if you can get a few of them turnkey.

Asians love to own GNC's. Must be something there.

Post: #13

I appreciate all the replies, gents. You folks are one fine tribe.

Post: #14

I've looked into it a little. Don't touch Quizno's with a ten foot pole. It's a decent product, but too many of the franchises are losers. Subway is a worse product, although those places are more successful. The potential problem there is that Subway franchises are literally all over the place, so other Subway locations may actually be taking a lot of your business. Hooters and Planet Fatness are safe, but both require a lot of money. I'd go with Dominos. I think my mom would disown me if she saw me eating that garbage, but that doesn't mean I couldn't sell it. In order to own one of the franchises you need to manage one for I believe one year. I actually like that idea, as it is a great way to learn the business. You have to apply for I believe an assistant manager position, then work your way up to manager, then stay there for about a year. You obviously need some solid capital, but it's nothing like what you would need for McDonald's, Hooters, or Planet Fatness.

Post: #15

(01-17-2016 09:52 PM)rpg Wrote:  

(01-17-2016 09:01 PM)h3ltrsk3ltr Wrote:  I've heard good things about GNC if you can get a few of them turnkey.

Asians love to own GNC's. Must be something there.

Selling steroids out the back. There used to be one that would literally tell us the supplements were shit and he could get us stuff that would "really work" as long as we met him when he got off.

Post: #16

(01-17-2016 11:32 PM)TheFinalEpic Wrote:  

(01-17-2016 09:52 PM)rpg Wrote:  

(01-17-2016 09:01 PM)h3ltrsk3ltr Wrote:  I've heard good things about GNC if you can get a few of them turnkey.

Asians love to own GNC's. Must be something there.

Selling steroids out the back. There used to be one that would literally tell us the supplements were shit and he could get us stuff that would "really work" as long as we met him when he got off.

What IS the business model of all those GNC's?

I can't imagine selling protein powder when you can get it at half price online is a ticket to the country club.

Even if you upsell everyone a multivitamin on top.

Post: #17

(01-17-2016 07:59 PM)The Father Wrote:  Sorry to be a pest, but anyone else with any experience on this topic? I need to get out of corporate America...

I was kind of hoping you'd go for my Rita's suggestion, then bring me on as the HR person in charge of "screening" all those young girls who want to be hired.

Seeing as how that's probably a fantasy, my question is why you see buying into a corporate franchise as exiting corporate America? It seems to me getting in bed with Subway, McDee's, etc. would be pretty corporate (i.e. "Meet the new boss, same as the old boss").

What about stock trading or investing so you can live off the dividends? I assume if you have enough to buy a franchise, you'd have enough to do this. My (ex-wife's) aunt sold her big house, bought a smaller one she could pay off, and now lives off dividends from savings. I assume you know the market is cratering and it's now a good time to get in (unless the market opens worse tomorrow, in which case I take that back).

Post: #18

I know a guy who owned IHOP franchises which were surprisingly profitable. He owned maybe a dozen, they ranged from $1 million in revenues to about $2.7, with net profits ranging from $100k to $250k (before owners salary). I don't know much more about that business, but the profit margin definately surprised me.

Post: #19

I own a restaurant franchise. I have one location at the moment but will be expanding to our second location soon. Also looking at the moment to buy into another franchise as well. Ask away but I'll give you some overall advice.

Location is really important when it comes to QSR/restaurants. Need heavy foot traffic.

Are you willing to work day in and day out at the store?

At the moment I am looking to buy a subway so I went and got a job at one to see if this something I would want to do. I previously was an investment banker and its a complete cultural shock. You have to have a thick skin, I have customers giving me attitude because they think are above me because I work at subway. Majority of the customers don't realize that I made more money in one month than most of them make all year. you are in a similar position to me coming from a corporate background, it is a big adjustment.

The best advice is to go and get a job at a franchise you are looking at and work on nights and weekends and see if you want to do it for the next 2-3 years. After that time you can focus on opening more stores and not actually having to work in it.

The big money is owning multiple locations and the real estate.

I'm typing from my phone so I apologize if it is a bit confusing.

Post: #20

Dominos would be a good one. Pizza has very high margins, the cheese costs more than your labour!

Dominos also does well as they do drop offs and cater to pick ups. Many places like Little Ceasers focus to much on pick-up when people these days are way more lazy. In a perfect world of you could hustle these new Apps (Uber, Hurrier) to deliver your pizza without the Corp knowing you could save big.

Coffee is overkill now as Starbucks has infected every city like roaches. Maybe tea would be good? DavidsTea is full of queers and women but they are busy and make money, I would wonder if they have franchise options? Would not be a bad one to look into.

I always think the best strategy is to work backwards. Think of the market and locations you want to serve. What are high traffic locations that might be under served? What groups with money need shit? Then from there look at franchise options to suit that work within your budget, work type, and that have a favorable corporate franchisee relationship (not overbearing, and not leaving you out to swim on your own).

Might be a Jiffy Lube off a Interstate expansion

DavidsTea near a new College campus

GNC in a new mall or near a bunch of condos (young yuppies like to stay.. or pretend to stay fit).

Many times you can cut deals on a lease on a new build as your bringing a reputation play of a known brand to the complex versus some random mom and pop shit. I've been seeing this a lot with GNC as of late around here, I just don't know the corporate structure.

Post: #21

(01-17-2016 11:25 PM)Merenguero Wrote:  I've looked into it a little. Don't touch Quizno's with a ten foot pole. It's a decent product, but too many of the franchises are losers. Subway is a worse product, although those places are more successful. The potential problem there is that Subway franchises are literally all over the place, so other Subway locations may actually be taking a lot of your business. Hooters and Planet Fatness are safe, but both require a lot of money. I'd go with Dominos. I think my mom would disown me if she saw me eating that garbage, but that doesn't mean I couldn't sell it. In order to own one of the franchises you need to manage one for I believe one year. I actually like that idea, as it is a great way to learn the business. You have to apply for I believe an assistant manager position, then work your way up to manager, then stay there for about a year. You obviously need some solid capital, but it's nothing like what you would need for McDonald's, Hooters, or Planet Fatness.

I was actually going to post on sub shops. You beat me to it, but I'll add my own thoughts.

Quizno's went from running nationwide televised and selling a product far superior to Subway IMO, and now many of their locations have folded, and the chain seems to be struggling for survival. Subway does better, because they sell their shitty product for practically pennies. But from what I remember, an owner of a Subway franchise makes about the same amount as a school teacher, and they put in a lot more hours. Jimmy John's is the newest franchised sub shop. They're better than Subway. Firehouse has been around for several years but just got into the DC market a few years ago.

All of the sub shops engage in a stupid business practice that is detrimental to their bottom line. They sell $10-$12 subs with 50 cent bags of chips. That's fine for lunch, and most customers agree. Those places are all busy during lunch. Go to one at 6PM, and they're ghost towns. No one goes to those places to grab dinner because most people don't want 50 cent bags of chips at dinner. It's a carryover from independent sandwich shops of the past, but you know what, most of the guys that own those old places were assholes. But a business like that requires a minimum level of staffing and you can't make any real money if your big rush only comes once a day, and mainly during the week.

One thing no one has pointed out are the royalty fees you must pay to have a franchise. You have to pay your initial franchise fee. This buys you a turnkey business, and with the more expensive franchises, part of your money is placed in a bank account so you can have operating cash for the first few months. Lack of cash at start up is why most businesses fail. After your initial buy in, you usually pay a percentage in royalties annually. It's typically around 6% of your GROSS. So you kow what happens if you only turn a 6% profit for the year? That's right, "fuck you, pay me." Some even charge a flat royalty and a percentage of the gross.

Some franchises also have you on a contract that can be renewed or not after X years. Some companies have a policy of not renewing. When they don't renew as a matter of policy, they will buy back the franchise from the owner. And then they sell it to a new franchisee at a higher cost.

One of the problems when you have to work for the company before they sell you a franchise is that some owners will fuck with you and fuck you over if you're a good manager. Dominoes used to be notorious for it. They would do it to keep good managers locked in to their stores, dangling the carrot on the stick just out of reach. Because it's not enough to just work as a manager, you have to have high reviews from the owner/boss.

The main appeal of a Franchise is the extra security especially when you buy into a nationally known chain. That security comes at a hefty price, and at the end of the day, you still have to perform. In addition, you have company stores being opened down the street from franchises. You have to agree to whatever promo BS the company comes up with. You have little autonomy which is good and bad. It's good because people can be stupid. Bad because company decisions are driven by shareholder greed at the franchisee's expense.

In the bigger companies like McDonald's EVERY single product in the store is bought from the McDonald's corporate office. They sell that shit to you for a profit, and the profit they take may be higher than a third party wholesaler like US Foods. Your grill will come from McDonalds, and it will be a rebadged grill from a known company like Vulcan. You will not have the option of buying the Vulcan brand grill for less money. As part of your agreement, you'll be required to purchase the grill from McDonald's.

You can make money off of certain franchises, but you've also expressed a desire to get away from the corporate world. Keep in mind that a franchise is an extension of a large corporation.

Post: #22

(01-17-2016 09:14 AM)Days of Broken Arrows Wrote:  I don't have any experience in this per se, but do have some advice. If you buy a place, make sure it attracts the kind of people you'll want to be around for long periods of time.

So these guys would be another sort of low priced alternative to a Hooters franchise:

http://www.bikini-baristas.com/bikini-ba...ation.html


I wonder if they franchise, or if you could just start one of your own?

Drop in every now and then to check on your workers:




And that all uniforns are adhering strictly to code:




And if you chose a conservative enough town, you would have all sorts of free publicity:

Post: #23

Does anyone have experience investing in a franchise in a foreign country?