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How much to invest in a Franchise?

Discussion in 'Franchising' started by Emma, Aug 21, 2008.

  1.  
    Emma

    Emma Senior Lab Tech

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    How much does it cost to invest in a typical national franchise like KFC etc?
     
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    Emma James

    Emma James Graduate

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    I'm not sure if it's hearsay

    but I have an astronomical figure in my head for the likes of MacD - in the region of 250K. Best thing is to do a quick Google I'd say, there must be some franchising sites out there with Q n A forums which could advise or perhaps a franchising specialist could advise?

    Naz may be a useful person to run the question by; http://www.ecademy.com/account.php?id=120141
     
  3.  
    Mark

    Mark Moderator Staff Member

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    I wish Naz would turn up here - a good egg and so full of knowledge. :yes:
     
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    Mat

    Mat Trainee Lab Tech

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    I looked into franchises not so long ago, and came up with similar figures to those quoted here. The figures seem very high, but a franchise can take a lot of the legwork out of setting up your business.
     
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    DIY Accounting

    DIY Accounting Freshman Premium Member

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    This quote reminded me of a chap I met years ago in Sheffield, prob 1990.
    Asian background, yorkshire man through and through.
    He solved the KFC franchise fee big time.

    Bought and tasted all the products, then invented his own recipes that I tried and they tasted exactly the same.
    Name of his business.
    Kenya Fried Chicken

    The moral of the story is if you have the ability you don't need to pay extortionate amounts for a franchise but can duplicate the business model - without breaking copyright laws of course - and being a little unique do even better.
     
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    Mark

    Mark Moderator Staff Member

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    There are KFC 'clones' all over the UK but I do seem to recall one in Sheffield I visited a few years back. Or was it a pizza place? I remember onions and stuff. I was very... very drunk at the time... :drunk:
     
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    Dot Design

    Dot Design Graduate

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    Didn't know these franchises were so costly to setup! But I guess your buying a ready made business in terms of a recognised brand and product, I expect choosing the location is the key thing along with getting the right kind of staff.

    A fair few 'Subways' have popped up in our city centre in the last couple of years, they seem to have done instantly well, anyone know how much for a Subway' Branch?

    I feel abit peckish now!

    :)
     
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    Prism Hosting

    Prism Hosting Guest

    I looked at the subway franchise and you are looking at paying 100k at least.
     
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    businessinline1

    businessinline1 Guest

    It might be little expensive.Better to have talk with the concerned person.It hink it's better idea to go with KFC.
     
  10.  
    NikkiPilkington

    NikkiPilkington Lab Tech

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    The thing that a lot of people forget when buying a franchise (and here I'm talking about a lower cost franchise such as City local, WSI, etc) is that just because you've paid for a franchise doesn't guarantee success.

    You still need to promote your business, find customers and provide good customer service, just as you would if you had started your won business. You'll still have to network, chase accounts, make sure invoicing is done on time, etc etc etc. Paying for a franchise doesn't cut out the hard work.

    I sounds as if I'm anti franchise, but I'm not at all - I ca see how it is a good idea and can work well for some people. However, I do think that in a lot of cases the franchise is mis-sold as a 'ready made business' when in fact it isn't.

    Obviously in the case of McD, KFC etc you have the value of the brand and everything, but with smaller franchises (Chips Away, Kleeneze, Waterless Detailers, etc) there's still a lot of donkey work to be done.

    I was once asked if I'd consider franchising NikkiPilkington.com - once I'd stopped laughing and looked seriously at the proposal, I realised that what I wanted to sell and what people thought they were buying a lot of the time were two different things.
     
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    Paul Norman

    Paul Norman Businessman

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    Franchises have the potential to be very good as a business model. Or not. Each needs looking at on its own merits.

    Before investing, make sure:

    1. You believe in the product - a lot.
    2. You understand the business model completely.
    3. You believe in the revenue projections, even on a gloomy day.
    4. You have understood the small print, the exit terms, the hidden costs, the on going financial commitment.

    Like Nikki, I am not anti-franchising, just cautious as I meet lots of people who are disappointed. I also meet people who are pleased, but you do want to be certain which group you will become a member of!
     
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    Mark

    Mark Moderator Staff Member

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    £64,000? Do banks typically loan that sort of money for potential franchisees?
     
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    Virtual PA Star

    Virtual PA Star Guest

    agree whole heartedly..... went to see someone about setting up a franchise and decided to set myself up as a competitor instead... there were holes and mistakes and they wanted a huge amount of money for not much at all really...(they offered to do my invoices and discount on some memberships i wouldn't need!!)

    I just thought... I can do so much better than that ... so I'm giving it a go for no investment at all really
     
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    Paul Jennings

    Paul Jennings Applicant

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    I know someone who had a Maccy Ds Franchise and the bottom fell out of it after supersize me, he now has 2 subways, I wouldn't touch them with a barge pole.
    MDs takes around 15 years to make your money back and you have to go on training for 10 months - so you're not earning for that time and subway takes a little less time to make your money back at 10 years!!

    Paul
     
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    AaronPollock

    AaronPollock Applicant

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    Location's everything. I worked in a small market town here (N Ireland) up until a year ago. A real shortage of places to buy lunch except for a local (very busy and uncomfortable) bakery. A sandwich shop opened and was instantly hiving with customers. A few months later, Subway arrived. Same idea.

    Franchise or not, if the product and market are poorly matched, you're probably dead before starting.

    I wish I'd had access to the capital to open a sandwich shop there when I first noticed it. Then again, the arrival of Subway may have killed the smaller sandwich shop by now.
     
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    Make It Cheaper

    Make It Cheaper Applicant

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    Yes it is interesting that 'chicken shops' tend to get cloned. You see many of them in London much of which seem to have a brand name based on some kind of building i.e. chicken lodge, chicken cottage chicken palace. I was thinking of some new ones, my favourite being 'chicken bungalow' but you could have chicken chalet, chicken maisonette, the possibilities are endless...

    Anyway back to business. I think it is a valid point that the market already seems to have been ‘commoditised’ to a degree with chicken shops. That is to say that the KFC brand wouldn’t have as much brand trust comparative to say MacDonald’s. The main thing to look at is the franchise package. Are they going to tie you on purchasing contracts? Some packages can be very restrictive for example if you were a pub you would be tied into buying your beer from the brewery. Ultimately you need the flexibility to run your own business and make it work with added benefit of a trusted brand.
     
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    fikri4u

    fikri4u Applicant

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    Believe or not there's also a franchise which does not require you to pay franchise fee or setup fee. It sounds crazy but it's true.
     
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    diggersjohn33

    diggersjohn33 Graduate

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    Sure its individually dependant right?

    Meaning... Every franchise set-up is different thus, requiring different levels of finance at the start.

    John
     
  19.  
    JPM

    JPM Junior Lab Tech

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    Ok, I may get in trouble for bringing up an old thread here, but i'm curious what you are referring to? If you are even still active in this forum.
     
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    ping

    ping Senior Lab Tech

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    This is tough because it will all depend on the consumption levels of that product - this isn't an easy one.
     

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