porscheguy
Ostrich
RE: Franchise?
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.
I was actually going to post on sub shops. You beat me to it, but I'll add my own thoughts.Merenguero said:
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.
