Anybody here with a Franchise?

[tommyboy]

A bit of background first. I am 42, married, small mortgage, no kids.I have been in my current job for 23 years and can now draw a small immediate pension or can push another 9 years and double that pension, i don't hate my job but i am interested in seeing what else is available. I have worked from the very bottom to the lower rungs of middle management via some pretty demanding posts and i like to think i am adaptable and hard working.
I have always had a small thought that i would like to try to run my own business, not sure what tbh. I was wondering if a franchise would be a sort of halfway house that would give me the confidence/experience to eventually run my own business? i would really like to hear anyones experiences on running their own franchise.
The cynical part of me thinks that they are all run for the benefit of the founding individual and you are tied into a very one sided contract but i am sure there must be some good franchises out there…….?
Comments and questions welcomed.
Tom

[valleywatch]

I don't have a franchise. I did think about it many years ago........but like you say, I had my doubts about who the franchise was the most beneficial to?

"Personally" if I could double my pension in 9 more years? That's the route id go along. Then see how you feel then?

I don't know how much you like your job etc........ but unless you get a franchise doing something you are really "into" and enjoy doing, then you may well find yourself in the same position you are in now.......but without the benefits? (pension, presumably sick pay etc?).

As I say, Ive vever had a franchise..........so I would love to hear some replies from somebody who has one and how they are getting on?

Another thing! Last year I was sick, I had to have 5 months on the sick, then when I went back to work , I was doing "light duties" for just a few hours a day. In short, I was on full pay the whole time...so had no money worries........may well be an issue with taking out a franchise?


Of course, we are all different.....if you hate your job etc and are OK financially, then its a different kettle of fish!

[Shropshire Lad]

Hi. I don't have a franchise but several of our clients are franchisors. We deal with the franchisor and sometimes directly with the franchisees. Some of the franchisees are very successful guys in their own right. PM me if you have any questions and think I might be able to help.

[Alex L]

I work for McDonald's, if you have any specific franchising questions I may know the answers and if not can find out quite quickly.

A McDonald's franchise is quite a large commitment and must be your primary business, you must undertake a lengthy training programme and if successful go through a number of interviews before being selected. It is only then a restaurant will be offered to you and a large percentage of the franchisee fee must be funded by cash and the rest via a business loan.

The returns are good but investment is high.

[demonloop]

I know a girl with a few Subway franchises. She's doing really well at it, I hear.

[DavidL]

A bit of background first. I was wondering if a franchise would be a sort of halfway house that would give me the confidence/experience to eventually run my own business? i would really like to hear anyones experiences on running their own franchise.

Franchises vary enormously even within a sector. The good ones have very defined trading patterns and procedures which, if you stick to them and the original groundwork was sound, will make you a decent living. It will be damn hard work though, much harder than anything you have done working for someone else.
The flip side is that the good ones are getting saturated geographically and you do start to wonder if these "secondary" sites are really worth having.
I did hear that things like Subway want a "line of sight " to the next branch in high population areas. I don't know much about human demographics and movement in dense population areas but is 100yds really too far to go? Is another branch needed or does it just dilute the sales?

The cynical part of me thinks that they are all run for the benefit of the founding individual and you are tied into a very one sided contract but i am sure there must be some good franchises out there…….?

Never be under any illusions that any franchise agreement is anything other than for the benefit of the franchisor.
The contracts are such that ordinarily you would never sign them such is the bias. You pay for the startup, you pay for the name you pay for the trading right under that name, you pay for your stock from the franchisor (at a mark up of course), you pay for the marketing organised by them, you pay for the computer systems (only from them), you pay, you pay you pay (see the pattern?)... the up front franchise fee is often only the tip of the iceberg.

So why do it? Because it gives you the structure to see what you could do better which whilst is expensive is not catastrophically so, ie your business doesn't fail. Yes if you got it all right on your own from the off then you would make lots more money but have you seen the new business closure stats? These people didn't get it right but if you met them they are bright, articulate people with drive. Just like you and me.

Will you work in it? Staff are great (mostly) and a right royal PITA sometimes. Not being on site might be a mixed blessing.

My franchise was cheap (in fee terms) but the support and structures left a little to be desired. But we managed and were fortunate to be cut loose when the parent co was bought and now we are far more profitable. The last few years as a franchise we ran it with no help at all so it wasn't much of a step when free.

An established name will be expensive but will make you a living, but maybe not a fortune (say Dominos as an example). A new brand (Papa Johns?) might make you a fortune but you have to choose carefully and be a bit lucky.

[whoami]

I work for McDonald's, if you have any specific franchising questions I may know the answers and if not can find out quite quickly.

A McDonald's franchise is quite a large commitment and must be your primary business, you must undertake a lengthy training programme and if successful go through a number of interviews before being selected. It is only then a restaurant will be offered to you and a large percentage of the franchisee fee must be funded by cash and the rest via a business loan.

The returns are good but investment is high.

Interesting.

What sort of cash commitment is required?

[Junaid8]

A sandwich shop like Subway would be a good start if you did take the plunge.

[jimp]

hi, any idea the fees for setting up a subway?

[Kingstepper]

I'd have thought that you would be better off looking at a franchise in an area in which you had some knowledge, expertise or at least interest rather than looking for a 'good one'.

[Alex L]

Interesting.

What sort of cash commitment is required?

Where we differ from other franchise run companies the restaurant locations are not chosen by the franchisee. Instead the company determines the location and purchases the lease/freehold and then decides whether it will be franchised or company run. The theory is that the locations are strong and new restaurants won't cannibalise existing sales from nearby restaurants.

In answer to your question, taken from our website

What does it cost?
As a guide, the cost of a restaurant typically ranges from £125,000 to £325,000. You will need to provide at least 25% of the value as unencumbered funds, the remaining 75% can be funded through a bank loan with favourable funding terms.

There's also a one-off franchise fee of £30,000 and a training deposit of £5,000 which is refunded when you complete your training.

There are also ongoing fees:

Monthly rent on the premises, based on sales and profitability (usually ranging from 10% to 15%)
Service Fee for the use of the McDonald's system - 5% of sales
Contribution to the national marketing spend, currently 4.5%
And the returns?
Cashflow (before debt repayment) typically ranges from £95,000 to £200,000 per year for each restaurant but this isn't guaranteed: it could be more, it could be less.

[teknicolourfox]

I looked into Subway a while ago

http://www.subway.co.uk/business/franchise/

Not sure what current rate is - from memory minimum outlay was approx 36k?

Update - http://www.subway.co.uk/business/fra...formation.aspx