Would you like to make $100,000 as a franchisee?
Can you make $100k?
Let’s find out.
Franchise Profitability And The FTC
When it comes to franchise profitability, the Federal Trade Commission (FTC) has very strict requirements for franchisors about how they can present earnings statements (claims) to prospective franchisees.
For instance, if a franchisor chooses to disclose earnings claims (many franchisors choose not to) they must be provided in writing-in the Franchise Disclosure Document (FDD) and all material information must be accurate and substantiated.
That said, don’t throw in the towel just yet. There is a way for you to find out how much franchisees make in the system you’re interested in potentially becoming part of. I’ll tell you how in a minute.
Seeing Franchisee Profits In Black And White
If you’re researching a franchise that happens to provide an earnings claim in their FDD, you’ve already saved a little time. You’ll be able to see in black and white how long it takes for revenue to start coming in, approximate break-even times, and maybe even franchisee profitability.
Even if the franchisor does provide an earnings claim in their FDD, it would still behoove you to contact several existing franchisees. Just to verify the figures. That’s right; all franchise buyers should get a second opinion!
Good News About Franchise Profits
I’ve found (as have the thousands of folks I’ve worked with) that franchisees-are for the most part, more than willing to spend some of their valuable time with you discussing their experiences as franchisees, including sharing their financial/income information with you. It comes down to how you ask for it…how you ask for the information.
A gentle tip from The Franchise King®:
Do not buy a franchise until you know EXACTLY how to do thorough research.
Learn how here
Contacting franchisees is the most important part of your research. Make a commitment (right now) to call and talk with 10-15 franchisees of the franchise company you’re interested in. In most cases, you’ll be able to get a good feel for how much money franchisees are making, how long it takes to make money, and dozens of other really important things about being an Owner.
I Can’t Emphasize This Enough
Don’t ask franchisees how much profit you should be able to make as a franchisee…right out of the gate.
Instead, get to know them a little. Ask them questions that don’t have to do with money at first. Ease into it. Most of the time, franchisees will share their profit numbers. They’ll tell you if they’re making $100k a year.
Tip: I go into way more detail on how to get franchisees to share their annual earnings with you in “The Definitive Guide to Franchise Research.”
Franchise Profitability: One More Thing
If you ask me how much you can make as a franchise owner of a specific franchise, I’m not going to be able to answer that question for you. Well, not very well.
That’s because in franchising once size doesn’t fit all. Store volumes are different. Margins are different. Business expenses can be different from one part of the country to another. There are just too many variables. Plus I rarely know profit numbers…although sometimes I do. So there!
In any event, you will be able find out about franchise profitability if you do your franchise research the right way. (Grab my guide)
The bottom line?
The only way to found out (specifically) if you can make $100k or more as a franchisee, is to ask the franchisees.
Just make sure you learn how and when to ask them.