Franchise Experience?

Champagne Breakfast

Does anyone here have experience in the franchise business? Ever owned a franchise, worked for company etc?
For the past year I've been exploring a big franchise opportunity. I'm still working on it but getting a bit turned off to the franchise world and may bag it due to some major business concerns, namely with the parent company.
I should also mention they take 11% of each locations monthly sales.

Thanks.

81

I worked for a company that had a few franchisee's. They used to have a ton more, but bought them up over the years.

I forget what the franchisee fee's were, it's been so long.

I audited a number of them when we were buying, as well as auditing others to ensure they were reporting the proper sales.

They had all done well and made good money.

not much huh.

JaneNY

I do. Read your franchise agreement CAREFULLY before signing. Show it to a lawyer. Usually the franchisor holds just about all of the cards, and you MUST agree and comply with all their terms. There are probably requirements that cost you money, but they won't pay for, such as a certain type of signage, paint colors, etc. You may be required to pay for or contribute to an advertising fund.

Look into territory - is your territory protected or will they allow other franchisees to set up shop next door to you?

They may emphasize your gross, but the number that is important to you is your net on Schedule C. Are you going to be a sole proprietor or become an LLC?

If you have questions you can pm me if you like. I'm not here every day these days - I'm returning to school, so I can eventually get out of doing the franchise work that I do now!

Your 11% continuing franchise fee is sizable, but I actually pay more. Its tough to pay percentage off the top because then obviously you must pay your bills, and hope there's something left for you when the dust settles.

Look into the suggested business model, if there is one. Run it by an accountant. Franchises can work well, but don't always.

tinkerbell

I just recently left a job working for a trade franchise business. My advice would be talk to some of the other franchisee's and ask for an honest opinion as to how they think the head office works for the franchise holders. My old boss is now in the middle of a very difficult and bitter separation from the franchise agreement as are quite a few other branches. If the head office is supportive and works to help you it can be a great experience, but if they enforce high franchise fees or percentages and do not seem to help wth promotion and planning then I would steer clear.