Should I buy into a franchise?

posted 2 years ago in Career
Post # 2
812 posts
Busy bee
  • Wedding: February 2013 - Mansion House at the MD Zoo

I don’t have direct experience, but it sounds like a neat program. Do you already know sign, or enough to teach the baby stuff? I’d wonder if you could start doing some less-formal classes, maybe through your pre-school, religious community, stuff like that to see how much interest there would be and what people would be willing to pay. IE before you jump in and put out all that money, see how popular it would be and what it’s really like to teach the classes.

Post # 3
716 posts
Busy bee

I would suggest running a little math.

Pencil out the first 24 months in a spreahsheet if you can.  You will get revenue from # students * $ per class and you will have expenses.  Expenses include all the things your listed – the initial fee, rental cost of the building, insurance cost, business adminstration costs like taxes, and renewal costs.  How many students can you expect each month and how much can you charge?  Then deduct your expenses each month.  Does your revenue cover your expenses?  How many months does it take you to pay back your initial fee?

The answer is probably that it takes many months to get your money back / before you make a profit (or can stop funding losses out of your pocket), unless you ramp up the # students very quickly.  Are you prepared to really hustle?

This is how I would think about it.

Post # 4
353 posts
Helper bee
  • Wedding: May 2015 - The Fairmont, SF

From the sounds of it, my response may not be relevant but here goes: my FI owns several franchised restaurants in two major chain restaurants and it is a LOT of work. He starts working at 8AM and sometimes doesn’t finish until 11PM, on bad days. For it to remain successful, he really can’t just work on it “a few mornings a week”; it’s constant. And since he’s the big boss, he has to deal with EVERYONE’s complaints, concerns, questions, etc. Again, your intended franchise may be different from my FI’s situation but some make you pay chunks of your profits to the head company in addition to paying a large downpayment to start up.

That being said, if you’re interested in this and you’re passionate about it, go ahead. I’d try to do as much research and talk to as many people as possible before making a decision and try to chart out your projected finances. As Jamb mentioned, you’ll need to take into account that marketing costs a lot and it may be a while before you get consistent clients. Make sure that your franchise won’t have TOO much trouble breaking into the market with the existing and established centers in your area.

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