I admit I am not a fan of franchises. I see them making only guaranteed money for the franchisor and seldom if ever for the franchisee.
I do know a couple who own a Chick-fil-a and they seem to be doing well, but the costs were high and it took a tremendous amount of combined effort to make it a success. Yes, just like most businesses.
But I have seen franchisees fail and go out of business never making back the franchisee their intimal payment back.
A banker once told me that he works with a number of franchisees and most of the owners he works with are immigrants. They like and need the structure provided to survive the Chicagoland market. They believe it allows them greater potential for success than starting without the corporate logo.
But I still have a problem with franchises, especially the big ones; McDonalds, KFC and Dairy Queen. We have all heard of these, but the minimum investment needed to even think of these is over $1mm.
Then we have those that we never heard of like “Hot Dog on a Stick”; what are you getting for the minimum start-up cost of $338,200. I doubt it is a land and a building.
The risk cost analysis and ROI is critical in determining if it makes sense to do a franchise. I had one client looking at one, where the revenue was declining, the advertising was increasing and the owner would not show the previous year’s tax return or any current financials. Wonder what they were hiding…
Caveat emptor.