Anyone own a franchise business ie Subway, Great Clips

Discussion in 'Community' started by bbarnhart, Aug 8, 2005.

  1. bbarnhart macrumors 6502a

    bbarnhart

    Joined:
    Jan 16, 2002
    Location:
    Stilwell, Kansas
    #1
    I'm wanting to talk with people who own or know someone who owns a franchise business (Subway, Great Clips, UPS Store). The office where I work is shutting down at the end of 2006. The company I work for is moving most of its development overseas and I fear that any future programming jobs might move overseas as well. And, after 15 years of software development, I'm looking into doing something different.
     
  2. SamIchi macrumors 68030

    SamIchi

    Joined:
    Aug 1, 2004
    #2
    I want a DQ where I live... Their commercials look so good... Sorry I didn't answer your question but that's what popped up. I wish I had the capital to open a franchise.
     
  3. dmw007 macrumors G4

    dmw007

    Joined:
    May 26, 2005
    Location:
    Working for MI-6
    #3
    Don't own one personally, but it would be an interesting adventure to go and purchase one and run it.
     
  4. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #4
    You have to worry about saturation with franchise stores (if they are fast growing), which drastically eat into store sales.

    Taco Bell, Burger King, Krispy Cream are probably the worst recent examples (lot's of examples in YUM business model though), examples bad enough that it sent many franchisees into bankrupcty when a new store opened up too close to yours.

    Taco Bell was probably the absolute worst that I can recall, they expanded way too fast without regard to existing store sales.

    Of course Krispy Cream sort of followed the Rally's and Boston Chicken model on corporate destruction.

    ---

    There are some great deals in existing franchises, where they are willing to give struggling stores away to minorities to smoking deals to see if they can turn them around -- these are usually franchisees that went belly up and the corporation got stuck with the struggling business.
     
  5. RugoseCone macrumors 6502

    Joined:
    Aug 22, 2002
    #5
    Think long and hard before you get into this line. Definitely check the "fruit on the tree" before leaping into this. Often times franchising isn't much more than buying yourself a job.
     
  6. mariahlullaby macrumors 6502a

    mariahlullaby

    Joined:
    Jan 19, 2005
    Location:
    NYC
    #6
    My friend's parents opened a franchise last year (though they don't answer to to the corporate ppl I think). They opened a Mellow Mushroom pizza place and it is really popular here. Don't know if that helps...
     
  7. stubeeef macrumors 68030

    stubeeef

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    Aug 10, 2004
    #7
    The food industry has far more failures than success. BE VERY CAREFUL!
     
  8. solvs macrumors 603

    solvs

    Joined:
    Jun 25, 2002
    Location:
    LaLaLand, CA
    #8
    As a guy who has several StarBucks in any direction from my home and where I've worked, you'd think that would matter more. But people love their coffee, so I guess it isn't that big of a deal in some places. Just know your market. There are places here that have a StarBucks across the street from another StarBucks. There was a shopping center in Seattle that had 3 of them out of about 100 stores. Not to mention all the other coffee houses.

    So if you're thinking of opening a coffee house in a big city, go ahead. You can never have enough apparently. :rolleyes:
     
  9. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #9
    while the 3rd startbucks knew about the other two (assuming different owners) they will get theirs when the 4th comes around.
     
  10. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #10
    Probably along the lines of how people satisfy their specific addiction -- never enough drug dealers, liquor stores, coffee joints, hookers etc. when you need a quick fix.

    Must go immediately to the nearest place...
     
  11. Steven1621 macrumors 6502a

    Steven1621

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    Apr 10, 2003
    Location:
    Connecticut
    #11
    It is a significant investment to get a franchise. Not just anyone can sign up. You need lots of expirence in a similar field and have a lot of capital up front. There is a much higher chance for success, though, compared to a mom-and-pop arrangement.
     
  12. Koodauw macrumors 68040

    Koodauw

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    Madison
  13. chucknorris macrumors 6502a

    chucknorris

    Joined:
    Jun 28, 2005
    Location:
    Moscow, ID (No Kremlin here!)
    #13
    Conventional wisdom is that franchises are more likely to succeed (due to pre-established products/promotion), but research actually shows they fail at a higher rate than single proprietor businesses. There are so many factors at play that it's hard to say though. A definite no as far as chains go is Subway.

    Subway franchises are actually sold by sales agents with pressure to meet quotas, which just encourages over-saturation.

    Anyway, use some judgment and do some research (Fast Food Nation is a good cautionary read).
     
  14. lem0n macrumors regular

    lem0n

    Joined:
    Mar 12, 2005
    Location:
    Milano...
    #14
    I've heard that [for McDonald's] you can only own one per family and once in your lifetime... my teacher aso said that it's all about the location that determine the success rate of the franchise
     
  15. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #15
    Funny I remember a family the father would give his kid their own store when they turned 18.

    There was also a lot of swapping of stores in that franchise business, which was owned by a couple/few families.

    That restriction may be for the McDonald's-backed "special rate" loans ...
     
  16. bbarnhart thread starter macrumors 6502a

    bbarnhart

    Joined:
    Jan 16, 2002
    Location:
    Stilwell, Kansas
    #16
    I'm not looking at any one in particular, just wanting to see what I could expect. How long before they become profitiable and then how much profit do they make? Can you run one or two smaller franchises and have a regular day job? Are these started and run at break even to build equity?

    I thought maybe someone here might own one of these types of store. I promise I won't open one near you. :)
     
  17. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #17
    You can usually find some profit estimates online -- but it might be a 60-80hr week every week (for you and a partner) to clear 100k after debt service.

    Quite a bit better if the debt isn't too high and/or you own the building.

    Not usually something you have another job with.

    Edit: Been awhile since I looked at the franchise bankrupties (when there were some huge multi-store franchises going BK weekly), and some of the stuff around the numbers. But the hours and cash flow will change depending on the franchise you go after. Restaurants are usually big time sinks.
     
  18. iJon macrumors 604

    iJon

    Joined:
    Feb 7, 2002
    #18
    In my town it seems that one person owns the whole franchise in our city. My neighbor owns all the Sonics, a customer of mine owns all the Subways. I don't know about McDonald's though.

    jon
     
  19. michaelrjohnson macrumors 68020

    Joined:
    Aug 9, 2000
    Location:
    54140
    #19
    You could try insurance. No, it's not really a "franchise", but there are usually opportunities available in this industry. Like many other businesses, startup is very difficult. 60-80hr weeks, little-no profit, etc. Independent insurance agents, like restaurant franchisees can turn a profit. But it's difficult with any new start-up.

    That being said, I dont' think we've yet reached Subway staturation. Despite the fact that there are 8 or 9 in my city alone. It's just damn good food, cheap, and close. Best. Francise. Ever. :)
     
  20. iJon macrumors 604

    iJon

    Joined:
    Feb 7, 2002
    #20
    Subways is hardly cheap. Check out your local Jimmy John's if you have one. Nothing beats walking to JJ's drunk on campus at 2:30AM and scooping up a $3 sandwhich.

    jon
     
  21. njmac macrumors 68000

    njmac

    Joined:
    Jan 6, 2004
    #21
    Take this into consideration:

    If you buy into a franchise, usually ranging from a measly 10 grand up to (more typically) 500 grand, you will, without question have to work full time. Usually 80+ hours a week. If you think that you can just hire someone to help you, then you are going to go out of business. No one will care about your business as much as you do. You must be there.

    Now, if say you wanted to get your feet wet, you could try a business that doesn't need 100% of your time and more money than you have, try something simple. Lets use an example of a Commercial Cleaning Company.

    It would work like this: you get one client in a small office building. After work, you go there and clean the offices. You need your own cleaning supplies. You can do this part time. Now, lets say the building next door, much larger, was reccomended to contact you. You can take the job at this point because your spouse, and maybe an older child/ or friend can help you. You work your butt off to have a full time job and a labor/time intensive second job. Now, more clients because of word of mouth come along. You have to make the decision. Am I able to turn down my decent paying job with benefits? (family of 4 health insurance = about 2,000USD a month).

    Probably at this point you could bite the bullet. Take it on as full time and even hire help. The more buildings you get, the more money. YOU MUST SUPERVISE THOUGH! Don't think you can take on 10 buildings and just hire out. you will get complaints and you will lose your business. People will steal from you. No one will be there to keep the books and you will get taken advantage of. So you must commit at some point. By the way, you could potentially make millions of dollars IF YOU GROW SLOWLY. That's right. If you take on too much too fast, you will undoubtedly go under. Take it slow. take one client, then another. Don't take a client if you can't pay your help. Wait until you build up a nice equity in your business. The 2 worst things you can do for your biz is 1) not being there, and 2) growing too fast.

    OR

    You can (especially if you don't have a family to support) jump right in and buy a Merry Maids or the like franchise. You have instant name recognition and training. You have a business plan already developed and proven to be a success. You'll have a guide on how to hire and where to get your supplies. You will be shown the system for keeping books. You'll have pre written ads that you just insert your contact info on. You'll be percieved as legit and many people would feel comfortable hiring your company.

    That being said, you will have to kick back a percentage of your sales everymonth, you may have to buy your supplies through the company, you may have to shell out a lot of money for the initial start-up. You will always have to conform to what the company says you must do. You are never in 100% control, and will never reap 100% of your profits.

    Obviously you may want a different kind of business than my example, but I just thought it may highlight some of the differences in the way you can run a business. By the way, the food industry is very long hours, hard work, messy, and you may get the feeling after a while that your "slinging hash" all day for a living. Oh, and its hot as hell in the summer.

    Good Luck. Please post back and let us know what you've decided.
     
  22. michaelrjohnson macrumors 68020

    Joined:
    Aug 9, 2000
    Location:
    54140
    #22
    I can get a $3.50 sandwich from Subway. Can't everyone?
     
  23. superbovine macrumors 68030

    superbovine

    Joined:
    Nov 7, 2003
    #23

    Your local SBA will offer free business advice and help with your business plan if you have question like this. they also help with grants and loans.(I am assuming your are american)

    http://www.sba.gov/
     
  24. mpw Guest

    Joined:
    Jun 18, 2004
    #24
    You mormally need to be working in a related industry already to get a franchise and that's especially true of hospitallity outlets.
    The advantage of a franchise is that you've already got a customer base familiar with what you do, they see a golden arch they know you sell Big Macs.
    You've got to weigh up so many different elements when starting your own business and location is paramount. If you can secure a good location ask whether you need the backing of a franchise.
    The franchise can cost a fortune, it's not just the management fee as I understand it.
    The local Subway franchise (came and went within 12months) had to stick to the company menu, buy all his produce from the company which you can understand but then they had rules like every snadwhich had to be wrapped in a sheet of grease proof paper with Subway branding and put into a little plastic bag with subway branding with a napkin with subway branding. The staff have to change their latex gloves all the time and the gloves have Subway branding etc. etc. etc. Of course anything that you have to buy and can't source from anywhere else is going to be overpriced.
    Also if it's a retail outlet in some instances you'll recieve the stock that they send you which means every franchise has to buy 20 branded umbrellas fine for the guy in Chicargo but the guy in Vegas is still gonna have them next year when he'll be told they've got last years branding and he can't display them anymore.
    Most franchisees are business men who don't care about the product and own more than one franchise, a Dominos here a Tie Rack there maybe a SunGlass Hut.
     
  25. bbarnhart thread starter macrumors 6502a

    bbarnhart

    Joined:
    Jan 16, 2002
    Location:
    Stilwell, Kansas
    #25
    First off, thanks for everyone's replies. A lot of good information and I appreciate it.

    What is most concerning to me or the most difficult step in starting a franchise or any self owned business is that I may have to work more than I do now and not have much income for several years. The business people or family who own 6-7 franchises had to start at the bottom with one business and grow it from there. Perhaps they were younger when they started. I'm 36.

    If I have to work 60 hours a week for a few years, so be it. I may even have to convince my wife to sell the new house we are building and moving into a smaller house so we can get by on half (or less) of my current income.
     

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