Franchise Opportunities Take All And Give Little Back

What does owning your own business and owning a franchise have in common? Other than having to manage the business, there really is very little in common. With franchise opportunities, you don't get to make any executive decisions, and you have to share your success with corporate America.

When you own your own business, there is less risk, believe it or not, than owning a franchise, so long as you know which niche to fill. If you go out and purchase a fast food franchise, you'll be expected to invest a certain amount of money. If you were starting your own business, your risk would end there. However, with franchises, your beginning investment is not the total sum of your monetary risk.

With franchise opportunities, you can expect additional hidden costs, franchise fees, marketing fees, and you'll have to hand over a significant portion of your monetary success. The main reason that people seek to own their own businesses is to enjoy the success of that business, without having to split it with someone who has done, comparatively speaking, very little work.

Those who are partial to franchising might say that you get your marketing done for you by corporate America. However, that is handled by marketing fees, usually calculated as a percentage of sales. Between franchising and marketing fees, you could expect to pay almost one fifth of your monthly sales, and you have no say over what you market, to whom and how.

Watch out for the fine print, because even though the initial investment may seem akin to that required to start your own business, there are bound to be other fees and costs in addition to that original investment amount. In some cases, additional costs can amount to a price equal to the original investment price.

Currently, saving for retirement is more important than ever before. With more people living longer, relying on social security payments is no longer wise. Imagine being told your investment into a franchise opportunity will amount to one hundred fifty thousand dollars. After all is said and done, extra fees and costs are added in, your total investment to get the franchise up and running is three hundred thousand dollars.

After the first three months you've earned that back in gross sales. Nearly twenty percent goes back to the corporation to cover your franchise and marketing fees, leaving you with two hundred forty thousand dollars. You have to order supplies, because after the first three months, you've gone through everything covered by your start up cost.

Suppose that leaves you with one hundred thousand dollars. Then you have to pay employees, taxes and benefits. If you have ten employees, each earning one thousand dollars a month, that's another thirty thousand dollars, so you're down to seventy thousand. After taxes and benefits, that leaves you with fifty thousand dollars. You have to still pay utility bills, and also cover any training for yourself or others, because the corporation will only cover training for a limited time. Let's say that your net profit is thirty thousand dollars after three months, or ten thousand a month.

From that, you have to cover your own expenses, so suppose you take five thousand a month to pay for your mortgage and other living costs. Five years would go by before your business has earned your original investment, and then and only then could you start counting any money made as pure profit. Now, compare that to investing less than one hundred twenty thousand into your own business. In less than three years, based on the described example, your business would be earning a profit.