I was in a networking group with a franchise owner. He never referred any business to me, including his own – but at one event we were talking, and he had imbibed a bit and he started to talk.
He was sorry he had bought his franchise. He had owned it for a couple of years and still had not had a chance to give himself a paycheck. He had been unemployed and was getting worried, without being able to find something. This was about 2007 or 2008 when things were pretty bad; especially if you were over 50, so he had made an executive decision.
He had come across this franchise for sale, he had no experience in the field; but was told not to worry, as the employees knew everything concerning the business. Also, the Franchisor, after approving him to purchase the business, would be there to assist as well, which is why they got a large cut of the gross revenue.
This gentleman was not from a finance background either unfortunately. Nor does it seem that he hired an accountant to look over the books before the sale (or after). Between the expenses to the franchisor, rent, employees, supplies there was no money left to pay him. He had bought a job. But, the job be bought didn’t pay.
I learned about a year ago that he had sold the business. So he found his greater fool. I am hoping that he got his money back and then some. Because in retirement some lessons learned have little value