Franchise Ownership

Investing and Markets 📈
1

Hi there,

Does anyone own/run Franchise opportunities as a longer term investment?

I’m just wondering if this is a suitable way for generating alternative revenue streams and whether you would have any thoughts/feedback about potentially getting involved in one

Thanks

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2

Great question @MortimerJazz Interested to hear peoples thoughts on this. Franchise fees, relationship with franchisor, did they pay the fit out of the location etc

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I’m guessing Franchising is not a massively popular option here, but I’m not going to give up just yet.

One quick question before I let the thread die: what should you expect in return for your Franchise fee? I mean, obviously you are able to use the brand and access to internal information/resources … but should you also be expecting things like marketing support? A commitment to marketing in the region to grow the brand perhaps? Training?

I don’t know - just trying to get a feel for whether I’m right to be expecting more for a franchise fee than just the right to be able to operate a satellite office.

Cheers,

4

I did my first degree in Business with economics so I know a little about this.
Franchising is essentially the same as opening your own business, except you pay a fee to the franchisor, they then provide you with whatever is in the contract, usually all the goods and marketing you need to get going.
You are essentially still owned by the franchisor, you are at mercy if they go into administration.
It can be beneficial to open a franchise, but you will still have to put in the hours that any new business needs, you can not edit prices or salaries, amend stock providers, etc. But you do get given a territory, hopefully helping you against competition.

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I had a multi drop courier franchise about until about 10 years ago. It’s was a great experience but you are hitching you’re waggon to someone else’s horse, in many cases you don’t have the ability to

  • set pricing
  • choose marketing options
  • control branding
  • other within the network can affect your business
  • you don’t always smart operating hours
  • you don’t choose supplier

While some of the above can be seen as a positive you have the research very carefully. The network I was part of was a model imported from Australia and 6 months after I gave my franchise back (cost £15k) the whole network folded and I would have been out of pocket to the tune of circa £8k and with no source of income.

Final point would be that if your franchise is a big success selling it can be difficult and you don’t truly own ‘the value’ you’ve created.

I wouldn’t rule it out completely but would approach with caution.