The Franchise King®

Can Choosing The Right Franchise Make You Rich? Part 2

yes choosing the right franchise can make you rich

 

Hell to the yes!

If you choose the right franchise-and do great research on that franchise, there’s a good chance you can create a nice revenue stream as an Owner. You may be able to build real wealth, too…become rich.

(This post may contain affiliate links. Please read my disclosure policy).

In Part 1 of “Can Choosing The Right Franchise Make You Rich?” I wrote about all the money franchising (as an industry) takes in every year. I showed you how to start aligning yourself with the right franchise opportunities. I also talked about setting your own personal budget for a franchise. Check out the other important things I shared in Part 1 of this post.

Now, I’m going to show you the different franchise models. It’s important to know what they are. Maybe one of them will turn out to be paved with gold.

 

franchise gold

The Franchise Business Models

If you want to become a rich franchise owner, you have to first determine how you’re going to get there. Specifically, you need to decide which model to use. Which model you’re comfortable with. Which type you see yourself owning and operating.

The Models

Single Unit Franchise Model

It’s possible to get rich owning only one unit…only one franchise business…one location. It just needs to be a super-high volume location.

The best example of a franchise business that does high volume would be a full-service restaurant franchise. Like Quaker Steak And Lube.

From their website:

Our franchise owners will be passionate about the brand, committed to operational excellence and have someone on their team experienced in restaurant and hospitality management. An owner must demonstrate a philosophical alignment with our values and operations approach. Interested candidates must have a minimum $500,000 liquidity for single unit development.

Total investment for one Quaker Steak And Lube restaurant ranges from $1.2 – $4.1 million.

Joel…that’s a lot of money!”

Yes it is.

FYI: Most full-service restaurant franchise opportunities require investments in the mid to upper 6-figure range, or more.

So, you’re saying that I pretty much have to already be fairly wealthy in order to buy a full-service restaurant franchise?”

For a lot of them, yes. But, you have to spend money to make money.

Joel, you tricked me. You promised to show me how to find franchise opportunities that can make me rich. You didn’t tell me that I’d need a million freaking dollars to do it!”

Actually, I didn’t trick you at all. I’m not talking about investing in any one of a number of home-based get-rich-quick schemes that are all over the net. I’m talking about investing in real businesses. Ones you can touch and feel. They cost money. You still want in?

There really are single-unit franchise opportunities around that can make you rich.

Some Math

If you can find a franchise in which the average franchisee does around $600,000 a year in revenue, with 15% going to the bottom line ($90,000) over time*, a good living can be had.

*Time being 10 years. Most franchise agreements are 10 years in length.

Go ahead and play with the numbers a bit. Make the revenue $700,000. Change that 15% to 20%. Add your investment income in. Would you be rich?

 



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multi-unit franchises

 

Multi-Unit Franchise Model

You may not need to already be a millionaire to invest in a multi-unit franchise opportunity. Pretty darn close, maybe-but not necessarily someone with a $1 million net worth.

Speaking of net worth, have you done your net worth statement yet?

If not, my friend Jeff was nice enough to write the code for a net worth calculator-and it’s free for you to use.

Free Net Worth Calculator

(Thanks, Jeff)

50% of the people who work with me show interest in owning multi-unit franchise opportunities. Some actually end up signing multi-unit franchise agreements. Some decide (after reviewing their finances and their financial goals etc.) that multi-unit franchise ownership isn’t in the cards for them. They end up buying a single-unit and things work out fine for them.

FYI: Every prospective franchise owner I work with has different budgets, different needs, and different financial goals. There’s no such thing as “One size fits all” when it comes to what people want in a franchise…what they want the business to do for them.

I have helped a lot of clients purchase multi-unit franchise business opportunities. Their financial statements showed $600,000-$1 million+. (Net worth) If you’re thinking of creating wealth by leveraging the multi-unit franchise model, figure you’ll need to have similar-looking financials.

Fact: In most cases, financial qualifications for a multi-unit franchise opportunity will be shown on the franchisors website. You won’t shouldn’t have to guess.

 

the math for getting rich with a franchise business

 

More Math

Let’s say you own 3 franchise units. Each unit is doing $450,000 a year in revenue, which makes your total revenue $1.35 million. If you’re able to take 15% out for yourself, you’re making a little over $200,000 annually. In 10 years time, that’s $2 million. Again, add in your investments etc. Would you be rich?

The Master Franchise Model

The upfront money needed to buy a Master Franchise tends to be on the high side. But, that’s not why most of today’s would-be franchise owners don’t become Master Franchise owners.

The reason that most of today’s prospective franchise owners don’t become Master Franchise owners is because they’ve never heard of a Master Franchise. But, there’s a Bonus reason, too; There just aren’t many Master Franchise opportunities available.

Master Franchise Opportunities Are Special

The thing that makes this model special is the potential for real wealth creation. A Master Franchise owner can build an empire.

But, what is a Master Franchise, Joel?”

A Master Franchise is an area franchise business. The franchisor offers an opportunity to purchase an entire area, to control it geographically, and to expand the brand by selling sub-franchises to others. The Master Franchise holder usually receives 50% of the upfront franchise fee and 50% of the ongoing royalty stream.

The Master Franchisee has two roles.

The first one is to recruit individual franchisees (sub-franchisees)

The second one is to train and support the sub-franchisees. (The role may also include business development…like helping sub-franchisees get customers)

Owning and operating a Master Franchise is a lot of work. It’s only for those who want to build a huge business for themselves. It’s almost like being the franchisor. As I said, cost-wise, the investment for a Master Franchise is on the high end of the spectrum, as you’re purchasing a large geographical area along with a big population. Here’s an example

Richness

Master Franchise owner math is pretty powerful.

Let’s say you’re the Master Franchise owner of a commercial cleaning business like Jani-King.

You sell 45 sub-franchises for $20,000 each in the first year and a half. You keep 50% of the $20,000 franchise fee. That gets you to $450,000. Some Master Franchise opportunities permit the owner to arrange financing for the folks purchasing the sub-franchises. So, now you have a monthly income stream coming in from the interest paid on the loans you hold. You’d also be selling the cleaning and maintenance supplies to the sub-franchisees equaling more revenue. One more thing? Is there room for more sub-franchisees? Sure. All you have to do is go out and secure more accounts. More new accounts.

an empire

Fact: Master Franchising isn’t for everyone. The majority of today’s franchise business-seekers aren’t looking to build an empire. That’s not to say that a good number of them (you?) aren’t looking to make good money as a franchise owner. They’re just not looking for something huge. A Master Franchise, with the right person behind it, can be huge. How huge? Play with the math a bit. You’ll see.

Success

One of the ways to increase your chances of choosing a franchise that can make you rich is by choosing the right franchise model to begin with. One that makes sense for you.

Maybe you like the idea of having one very successful franchise location. If that’s the case, focus on high-volume businesses like full-service restaurants. You may also want to consider niche-businesses. Franchises* that provide products/services that not too many other businesses offer, and that have high-profit margins.

*Hint: Look into automobile and/or industrial-related franchise opportunities.

Many of my clients bring up “multi-unit franchises” when we first talk. If you can see yourself owning multiple units of the same franchise opportunity, there are many, many opportunities for you to explore. Let me know if you’d like some ideas.

Schedule A Guaranteed Private Franchise Ownership Consultation

If you want to build something big…really big, you should definitely explore Master Franchise ownership. Franchise Direct has several Master Franchise opportunities listed.

To read Part 3 (you’ll really like it), click here.

 

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franchise article written by joel libava
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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

Joel is Highly Principled
There are many people in the franchise business who claim to to be experts in the field. Unfortunately many of them lack both knowledge and integrity. Joel, however, is without question one of the most qualified and principled people I know, in or out of his industry."
- Greg Reynolds, Retired Outplacement Counselor
"Many receive advice, only the wise profit from it."
- Harper Lee