To think about quitting my job & investing in a franchise

[lazzaroo]

I am feeling sick about returning to work tomorrow after the Xmas break. I hate the feeling....butterflies, won't be able to sleep etc etc. Have been considering alternative jobs, but only been in current post just over a year & don't want to be a fickle employee.

But, am giving serious consideration to trying out a franchise opportunity. Being my own boss, working to suit my lifestyle etc.

Anyone done this? Is it all too good to be true?

If you want a 'lifestyle' business - a reasonable income that fits round your available working hours - then a franchise may suit you well (given the questions and caveats listed up thread).

A franchise will never make you rich - it exists to make the franchisor rich. On everything you earn, you'll be paying money back to them. ANd of course the risk stays with you.

But as a lucrative Part time job, they can work. Do your research though.

Loads of good advice, thank you. Typically, work was nowhere near as bad as I thought it would be. I got myself so worked up about it last night. I'll still look into the information but am feeling a bit 'better the devil you know' about it now. My current job has lots of benefits & is there really anyone that completely loves their job?!? I really need to get better at managing my anxieties about it though. Thanks again.

People are usually advised to write business plan ahead of investing, look at all costs and possible expenses.
Run forecasts for different number of users/venues and find out where is the break even and be realistic on how soon you can achieve it.
Err on the side of caution and see how much would you lose if your business folded and you can't resell stock or re cup your license fee etc.

Be very very careful. I looked into franchises a few years ago and got to quite a late stage with one.

What you will be told is franchises hardly ever fail. That is not quite true. What often happens is the franchise fails and the franchise operator buys out the franchisee for a nominal sum so that they can say the business did not 'fail'.

In practice, the franchise I looked at which is an international one the franchise owner was making all the money and imposed an onerous contract on the operators of the individual franchise outlets. They were in fact all on minimum wage with a lot of debt and would have been far better just working for a normal business and getting paid.

Banks will also tell you they are keen to lend to franchise businesses. That is true but only if you put up your house as security. If the business fails you will lose your house if you cant pay back a loan secured on it.

Franchises are just a business but in this case you are paying a fee to someone else in order to have the right to run that business.

I have no comment on the franchise you are looking at but just be very realistic and demand to see actual figures and go and talk to real operators.

If they are not open about the profitability don't do it. Also get a lawyer to scrutinise the contract. The one I looked at was very onerous indeed and give the franchise owner a lot of power to demand arbitrary payments as well as complete freedom to change the terms of the contract with little notice.

I read an article in a newspaper a while back that said McDonalds franchises could be very lucrative, but as another poster (and the newspaper article) mentioned, only with a lot of hard work, and reinvesting in additional franchises. The providers we know running pre and after school stuff seem happy enough, but they are either hiding it well (unlikely) or not making a fortune. Hopefully you can make it work OP. I get that worry a sleepless night thing after a long bfeak though - and I like my job.

A McDonalds franchise costs £30k - that's a hell of an investment to make back. I can also imagine that the ongoing fees to McDs would be high. You would need to be earning significantly more than NMW to make it worthwhile, otherwise, you might as well just work in McDonalds without risking a fuckton of your own money.

Although there is a company near me that runs lots of the local McDonalds - but I expect that they are a limited company now rather than sole trader - maybe they are now in the position to make a lot, but I bet they had a few tough years at the beginning.

£30K? For a McDonalds franchise? That seems incredibly cheap. Did you loose a zero? Or two?

Are you a teacher by any chance? There's a book called 'leaving teaching' on amazon which has lots of advice for would be exteachers including a short section on franchises.

We did, and we are very successful. Ours is completely different to what you are looking at, we bought the franchise and we pay monthly rent, and we have to use the logo but we don't have to share any of our profits, we are not tied to using specific products or offering particular services and we set our own prices. We have a good relationship with the franchise owner and if we want to set up a second pitch we are able to use the branding without any payment to the franchise owner.

We are very lucky, a lot of franchises have many terms and conditions which make it hard to make any decent money!

The last time I looked into a McDonald's franchise it was closer to £500k with half of that having to be actual cash - I'd snap one up for £30k!

Obv £30k is a mistake, I think that must have been something else. But even £30k is a huge investment if you're looking at working long hours for minimum wage for a few years. How on earth do you pay the loan back?

And what happens if you can't and lose your house or end up in massive debt?

We borrowed £25k to buy our franchise and already owed another £8k - it was paid back within 18 months and we took a wage aswell. Obviously, it depends on what business you buy into but it's not all doom and gloom!

Lazaroo if you do decide to look further into franchising then feel free to PM me. I was in a similar situation to you 3 years ago in that I disliked my job and was desperate to do something different. DH was fully supportive and we could manage the drop in income. I bought a franchise in a similar field to you and work with lots of providers of children's activities such as art classes, swimming lessons and dance classes (some have set up on their own, others have bought a franchise and a few have built up a successful business then franchised it themselves).

I have absolutely no regrets, it is never going to make me a millionaire - and the franchiser went to great lengths to point this out - but I get a good hourly rate now and have a much better quality of life. My main advise would be to not rush into anything and do a lot of research. A reputable franchise will understand that you need to ask lots of questions and should never pressurise you into committing to it until you are ready.

Thank you all so much, and for your offer Tattiepants, I do appreciate it. I have lots to think about and need to get much more information.

Not a teacher clare but in a similar type of job.....the holidays are the biggest advantage of my current job! But also make the stress before returning harder, if you see what I mean. Only 6 weeks until half term

Oh, and what I've been looking at claims to be nowhere near £30k investment. I couldn't do that. Initial outlay is supposed to be nearer £5k but obviously there may be hidden costs. It's lovely to hear some success stories though so thank you for sharing.

Franchises are very good at separating the recently unemployed from their redundancy.

The Franchisor ( the seller) will try to convince you they have a 'brand' which is worth a premium - but the reality is most do not.

McDonalds and Subway are 'brands' and worth a premium.

The training isn't often up to much, and they are hard to get out of.

My background is accountancy. There are accountancy franchises that let you open an office without actually being a trained accountant - how scary is that for the general punter?

You still have to drum up all the business yourself - so why shell out £30k for the priviledge?

topcat - absolutely right.

"Franchises are very good at separating the recently unemployed from their redundancy."

Franchises are 'sold' to people.

Really. I have been to franchise exhibitions. I invest for a living. It was as far from investing as its possible to get. At best, people were just buying themselves a job. A job they could get by just going down the job centre.