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How much to invest in a Franchise?

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

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    YoYo

    YoYo Applicant

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    If you trust the franchisor when they state their start-up figures and projected earnings, there's no upper limit- don't worry so much about price, though; ask about the projected ROI and how long it'll be before the business pays for itself.

    Props to you for doing your research, incidentally.
     
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    Mark

    Mark Moderator Staff Member

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    Anyone here gambled and lost with a franchise?
     
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    Mr BAF

    Mr BAF Applicant

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    Regardless of how much you pay for a franchise - from a couple of thousand pounds to hundreds of thousands of pounds make sure you ask all the right questions and get the right information from the franchisor before you part with a single penny...

    visit my site to find out more...
     
    Mark likes this.
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    Tony Johnston

    Tony Johnston Applicant

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    Mark likes this.
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    Flatpack UK

    Flatpack UK Applicant

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    I've looked into and reviewed a number of franchises and the figures quoted for McDonalds, etc are about right. It's a big chunk to invest, especially as most people will have to borrow it - and if you don't have to borrow it there must be better ways to invest your money than in a business that won't give you a return for years.

    In the end you can make a lot but it makes more sense to me to find something smaller than will repay you in weeks rather than years, and with none of the staffing headaches that most McD owners seem to report.
     
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    speedysi

    speedysi Applicant

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    in answer to mark's question asking if anyone has gambled on a franchise and lost i think the use of the word gamble is very appropriate as investing in a franchise is very much like gambling as the people who win are the bookmakers - i.e the franchisors and most gamblers lose money rather than win. In a very similar way to gambling only spend what you can afford to lose as the franchise industry in the uk is completely unregulated with no help for franchisees who fail often through no fault of their own.
     
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    Matthewde

    Matthewde Freshman

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    I would go for a franchise that is not set yet in my town. Everybody wants to go with KFC, or food franchise ( they go well ), but why not trying others people, really!? Like a pawn or something...
     
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    Franchise Engineer

    Franchise Engineer Applicant

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    I think £150k to about £300k is about the total cost depending on the location. Total Royalty percentages (including factors like supplying stock) can range from 8% to 50% depending on the franchise operation. Typically food based fast food franchises will charge a higher "royalty" because they supply all the stock (bread, dough balls etc)

    Nikki Pilkington was absolutely right. Just because you buy into a franchise does not mean you are "buying success". The reality is that this is business. There are no guarantees, however, franchising offers you a vastly greater chance of achieving success than going it alone. And yes, there are great franchises and there are poor franchises - similarly there are great franchisee and very poor franchisees.

    People who are overtly critical of franchising often forget/don't know what it takes to start your own business and build a brand from scratch. They have forgotten/don't know the cost of all the mistakes you make along the way. They have forgotten/don't know that the man on the ground (franchisee or not) is the "x-factor" in the business. Nobody said franchisors are perfect, but I don't think that publicly attacking a brand without knowing both sides of the story is in any way helpful to anyone.

    So many people on these forums seem to "know a guy" thats franchise failed. Of course, they lavishly brand the franchise as a terrible criminal scam but never mention the often hundreds of success stories within the same franchise. They also almost never attribute any responsibility to the franchisee either?

    I just feel that these forums are meant to be helpful and in my experience, one sided attacks are not helpful at all.
     

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