“I believe a franchisor that has the financial wherewithal to let you pay as you go is a testament to the financial viability of the enterprise,†the 68-year-old says.
Because the franchise was initially home-based, Norsworthy kept his startup costs low. Not having to pay rent meant he could focus on other areas of the business, such as marketing, hiring, customer relations, and accounting. In three years, the business outgrew his home and he opened a commercial storefront.
While it’s true that it costs between $1 million and $2 million to open a local McDonald’s, some franchises cost only $10,000, says Miriam L. Brewer, director of education and diversity at the International Franchise Association. For example, you could spend as little as $10,500, depending on the population in your zip code, to open a Candy Bouquet franchise.
Indeed, you can manage some franchises and still collect a paycheck–for instance, a travel or janitorial franchise in which you could hire workers and run it effectively while keeping a regular 9-to-5. While most franchisors will require you to put up some of the money with your own funds, business loans can provide much-needed capital. Approximately 10% of loans (by revenue) under the Small Business Administration’s 7(a) loan program and 7% of the number of loans have gone to franchise businesses. Once your initial investment is paid off, you can leverage your profits to expand your franchise and own multiple units.
2. Running a Franchise is Easier Than Running Other Startups
In 2008, when Dr. Tasha Wallace lost 20 pounds in six weeks through Medi-Weightloss Clinics, the family practice physician invested about $150,000 in opening a franchise of her own. She’d already managed a private medical practice, so Wallace figured that starting the new business would be a breeze since franchises come with a blueprint and support system already in place. She quickly learned that that assumption was false. It wasn’t easier to run a franchise business–it was just different.
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