Franchising: The Numbers Tell the Story

When people see me speak about franchising, they ask me why I’m so passionate.  Well, the truth is, THE NUMBERS!  I typically prefer to take on challenges with less risk, and more opportunity for success.  That’s why I love franchising.

 

Starting ANY business comes with risk.  However, franchising does several things to mitigate those risks for those that understand the guidelines set by the Franchisor to be successful.  When you invest in a franchise, both money and time, the reward can be much more than you imagined.  A good candidate for franchising typically has experience in Sales and/or Marketing, understands the basics of Operations and Customer Service, and is looking to be in a business they are passionate about and committed to.  That’s it.  But you say “I know nothing about hauling junk, I’m in IT” – no problem.  One of the best aspects of Franchising is that it enables people that have experience in one field to transition quickly into an entirely different field without needing additional education or certifications.  The Franchisor provides the training as a part of the program.  The other aspects of franchising I love is the flexibility that owning your own business can provide, from spending more time with friends and family, as well as giving back to your community.  In addition, the options of what to do with YOUR business in the long run – from selling it for a nice profit, to Willing it, creating an environment of generational entrepreneurship.  Two things you can’t do when you are an employee. Not to mention, providing much needed jobs and support to your local community.  The value there alone is priceless.

And we haven’t even gotten to the numbers yet!  Here’s what you need to know.  From the basics to the impressive stats.  This data shows why I’ve become a raving fan.

  •  There are over 2,500 franchise brands available in 100 industry categories. That’s right, we’re not just talking food.  From Senior Care Services, to Children’s Education, Automotive, Health and Beauty, Locksmith, Consulting, Commercial Cleaning, and Home Improvement.  There’s something for everyone
  • A home based franchise has an average investment of $50k-$70k, while the Service Industry and Brick and Mortar establishments require an investment of $100k and $200k, respectively
  • Since 1983, 20,000+ entrepreneurs have utilized 401k ROBS (Rollovers as Business Start-ups) to access $5B+ in capital to fund new businesses. Many of those are franchise businesses.
  • The average Royalty Rate is between 6% – 8%
  •  Return on investment is between 12% – 14% for Food & Beverage, and low 20% for the Service Industry (not uncommon to go as high as 32%!)
  • Most new businesses have a ramp up period of two to three years, so the ROI is calculated after the third year of operation. Because franchises are typically run from a proven business model, ROI is generally calculated in year two.  A good ROI is 15%.  (for every $100k of capital you invest, you should expect to make at least $15k per year in return on the investment)
  • The number of franchise establishments grew in 2015 by 12,209 – 1.7% over 2014. Expecting 1.7% growth in 2016.
  • Employment growth in the franchise sector will continue to outpace the growth of employment in all businesses economy-wide, as it has in each of the last five years. Franchise employment is expected to increase 3.1% in 2016, while total private nonfarm employment will increase 1.9%. Over the six-year period, 2011-2016, average annual job growth in the franchise sector, at 2.7%, will be 0.5 percentage points higher than for all businesses economy-wide. [IFA 2016]
    • US Franchisees added 20,000 new jobs in January 2016, and remained at double the pace of the labor market overall for the past twelve months [ADP National Franchise Report]

 

If you are ready for that second act in life, have considered owning your own business, would like to see your family more, are a bit of a risk taker and want to make a difference in your community – give me a call for a free consultation.   Buying a business doesn’t happen overnight.  Let’s work together to identify what the best business opportunity would be for you, and learn how you can fund your business with as little stress as possible.  I partner with and advocate for my clients, so you’re in good hands.   Don’t go another year unsatisfied with your career, simply dreaming of doing more.