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Franchise Idea. Honest opinions needed please(16 Posts)
I run a part time business with my partner.
The business takes 2 hours every day to run and requires both of us to do the work.
Therefore it requires 4 hours a day and 20 hours a week in total.
The business currently makes a profit of £250 a week. Our customers pay cash upfront.
It may be possible we could increase profit to £500 a week as the business is still growing.
Obviously I want to give away as little information about the business as possible on an internet forum, but I will say that the business is a genuine product, 100% legal and does not involve pyramid selling of any sort.
I am interested in exploring the possibilities of franchising this business.
So, I suppose the question I want to ask is, how much would you pay to earn £250 a week for a 20 hour week?
If you think this is some sort of scam please just ignore this post, but if you would like to help me out, I am very interested in your opinions.
TBH not a huge amount, certainly not upfront as it may not work as well in a different location.
I would be more interested in paying a %age commission back I suppose.
That is a similar wage to the one I earn IYSWIM and it's not a huge annual salary tbh.
£12.50 an hour is not very much when you take into account all the overheads/tax/vehicle/equipment/accounting
As a comparison people who run care agencies get approx £18.29 an hour to run the agency costs while the carer ends up with £8.25 of that.
There are always costs to running the business. So I would say it's possibly not viable.
Thanks for the replies.
I would say that £250 is net profit, after all expenses/overheads. Admittedly still only £12.50 an hour though for 2 hours a day.
I 'd be interested but not sure that I would pay very much for it without knowing all the details, Is it something specialised that I wouldn't be able to do myself? How could you guarantee I would have customers?
Yes its something specialised. You'd be setting up the same business as the one I currently run.
We started doing 2 hours for 1 day a week and earned £50
We then expanded to 2 hours 3 days a week and continued to earn £50 a day.
Now we do 5 days a week and still earn £50 a day.
I have every reason to believe there is a demand for what we do in every part of the UK.
We work 5 days a week in a very small territory.
I am not looking for actual buyers right now, I am just trying to work out if its worth anything as a franchise.
Obviously if someone was to buy it, I would show them my accounts and business format, and prove it was making £250 net profit a week.
But for now its a case of, if you take me at my word, how much is it worth to someone to be able to earn £250 for 20 hours work self employed, every week
Or put another way.
How much is it worth to earn
£6,500 a year for working 2 hours every morning during the week.
the problem is until you replicate it in different area's you can't really prove you have a business model at all.
I am not saying you can't so that though but I don't think anyone will pay you anything as it stands because basically you would be forking out to earn roughly minimum wage - which you can do with no risk.
I am not being negative and well done for starting a business that makes a profit a lot don't even do that!
But ramp it up, and then see where you are at with it?
I know you're not being negative and you make a very good point about ramping it up.
I will say that I am extremely confident that the nature of the business means it will transfer easily to any other area of the country.
But yes it is only a minimum wage of sorts but for only 10 hours work a week, leaving plenty of time to earn more doing another job.
My business is a second income. I also currently work part time in another job as well.
Why would someone become a franchisee instead of just setting up on their own?
What do you give them other than the idea?
Could those hours be done on one day? Or could they be done in the evening? Because unless you're perhaps a stay at home parent or looking for evening work, 2 hours per day (in the day time) probably doesn't fit with having another "normal" job.
I agree that when you break it down to an hourly rate which is only £12.50 and even then it's only if it all works out, it's not a commercially attractive proposition if you need to make a significant upfront payment.
I agree with namechanged. Presumably the income is dependent on the business taking off as yours has done-how long did it take you to get to that level of profit and are you big/well known enough that buying a franchise would be worth it to a potential franchisee (by that I mean has anyone outside your trading area heard of you?!).
Is 12.50 an hr per person the most you can earn for those two hrs - what is the potential for earning beyond that, in terms of could you do it for 8 hrs a day - does it have to be two people or can you work as a single person, I would suggest an upfront amount and % of income with targets or you lose your franchise type of arrangement. Also think about it in terms of the person paying - when is payback for them so if it costs them £250 then payback is a week, if it costs them 2500 its 10 weeks of all the money so think about what is reasonable - so 10 wages and 2.50 margin then 250 is 10 weeks payback.
Also how much control do you want of their business, is there value in branding, could you earn more by having products they need to use sold via yourselves as sole supplier (ie they have to use you) and so on. The whole point of franchising something should be to provide you with an income over time, consistent and regular. What I would say is you might want it cheaper at first to prove the model works from their point of view, a financial point of view and your point of view. You will have costs setting up the franchise agreement and processes so that needs to be costed in too.
oh and why wld anyone buy a franchise
number of reasons off top of my head:
someone else does the marketing and branding etc
processes already set out clearly
tried and tested (although not nec in your area cld be same demographic for e,g)
easy way into running your own business and lessons the actual and or perceived risks
I would be more incluned to buy it if I could pay the cost out of my profit over time, with no charge if it didnt work out. E.g. Cost of £500, paid as 10% of profit, so £5 per day, -> £25 per week -> paid off in 20 weeks/~6 months when holidays taken into account. Higher profit, quicker payoff, no profit -> not out of pocket. Is that workable?
What I could offer is a successful transferable business format and marketing.
We recently expanded into a new area and within a month we were running at the same level of profit there as well.
I like the no profit no fee agreement, because I'm extremely confident the model will work anywhere