Entrepreneurship & Small Business

is buying a franchise a good investment?

  • Last Updated:
  • Nov 19th, 2017 10:41 am
Newbie
Apr 2, 2017
18 posts
i agree with lot of comments on this page Franchise can be hard thing to manage, and if you are investing upwards of half a mil on an investments you should want to handle it full time. Otherwise you will be paying big number to hire a proper manager than can actually take care of a new store. If you are looking to a part time owner a franchise may not be a good option- thats just my opinion though
Sr. Member
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Dec 16, 2015
713 posts
308 upvotes
Canada
cruisingadoptionworker wrote:
Mar 30th, 2017 3:38 am
Go to the CFA (Canadian franchising association). Great website. Stop at shoppers and pick up their magazine. It's a wealth of info showing a large breath and depth of opportunities. Attend their trade show and meet with the franchisors.
Op got his CFA yet?
Deal Addict
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Oct 21, 2015
2865 posts
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BC, Lower Mainland
saadt1988 wrote:
Mar 25th, 2017 7:34 am
So what about small franchise then? How easy is it to get one? What exactly and who exactly do I need to contact to buy one?
Very Easy. You just give that company a call. Many companies have their "franchise' tab on their website.
or better yet, just go to the franchise expo
Deal Addict
Oct 14, 2004
1157 posts
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Toronto
Judging by the fact that the owner of the Subway in my local Home Depot drives a Model X, I am sure they are doing ok with their franchise(s).
Sr. Member
Sep 22, 2009
637 posts
249 upvotes
Toronto
A friend of mine just opened a Heart to Home Meals franchise which delivers frozen meals designed for seniors to living at home. They love it, it's a massive growth industry and the start up costs were fairly low ($150k)

www.hearttohomemealsfranchise.ca
[OP]
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Jan 3, 2012
1206 posts
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Mississauga
theguru wrote:
Apr 16th, 2017 7:08 pm
A friend of mine just opened a Heart to Home Meals franchise which delivers frozen meals designed for seniors to living at home. They love it, it's a massive growth industry and the start up costs were fairly low ($150k)

www.hearttohomemealsfranchise.ca
Did your friend pay the full $150k or he took a loan from the bank?
Deal Addict
Jan 21, 2008
4014 posts
314 upvotes
Many franchises, the franchisee ends up working as much as a regular job & doesn't make much money, so they're not better off than they were before they owned a franchise.
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Sep 23, 2009
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Markham
SK_786 wrote:
Mar 26th, 2017 2:16 pm
I'm doing my research as well. But is there a problem if i ask people here for more information?
6 months and still no research has been done lol.
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Aug 10, 2013
1059 posts
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Arviat
Right off the bat I can tell you it won't be a part time thing, when you invest your money in a franchise u gonna be eating sleeping breathing that business 24/7 to make sure it's successful.
Deal Addict
Dec 27, 2007
2091 posts
341 upvotes
Edmonton
OP does have one thing going for him. He is lazy

Instead of researching, he puts up the post and we all research and give him the answers he is looking for, without him having to bother with basic google search.
Congrats OP, you got us
GG
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You only live once, get a v8
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Aug 16, 2010
3946 posts
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Aurora
Go to the Franchise Show and see if there's anything of interest. Check out some seminars there. Chat up some franchise owners of businesses you're interested in and see if the lifestyle is for you.

One thing is that you can not, absolutely, positively start a franchise business and not work in it. IMPOSSIBLE. Doubly impossible with a small business with a small number of employees. You'll be living it, breathing it, dreaming it, and when you're not thinking about it, you'll be feeling guilty about slacking off not thinking about it. You'll have sleepless nights thinking about how you're going to pay back the hundreds of thousands you've invested to get it off the ground and the month-after-month of losses you'll incur before you gain traction - which hopefully you will, eventually. You'll be stressing employee turnover wondering how you're going to fill that hole in your schedule (surprise - it you!) until you find a replacement.

It's a tough route, especially for someone used to the security of a steady bi-weekly paycheck. But it can be rewarding. And once you gain traction, there is good freedom and flexibility on how you spend your time.
Sr. Member
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Oct 27, 2004
911 posts
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As I understand, franchising isn't buying a business, it's buying a job. One which, like others have previously mentioned, will need to be your focus 24/7/365.

I know a guy who had a couple Quiznos stores when they first came to Canada. His plan was to work his butt off for a couple years, then just hire managers to run the stores. Didn't forsee the time commitment required, and the inability to hire trustworthy staff (finding good people at 10 bucks an hour is near impossible). In the end, he lost a bundle and sold the franchises for next to nothing.

Some people have figured out how to make franchising work, and have become very successful in the model. Personally, I wouldn't touch a franchise, even if someone else paid the initial outlay.
Member
Sep 19, 2009
327 posts
120 upvotes
Hi. My request to OP is to not sign any kind of personal guarantee with landlord if taking any franchise businss . Even if you have to give a personal guarantee, dont give more than one year and cap the total amount which the landlord and franchisor can claim of you. Thanks.
Deal Guru
Aug 2, 2010
10949 posts
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2009M5 wrote:
Mar 26th, 2017 2:03 pm
Anyone find it ironic that a Financial Analyst can't do basic research and put together some insight for himself on this? Lol...

Anyway, personally, I'd avoid a franchise for the following reasons:
1) high amount of capital: anywhere from $500K to $1M is required to start a franchise
2) lack of diversification: all of your eggs are in one basket, e.g. this one business at this one location. Couple that with the high amount of capital, it's horrible from an investment perspective

As an alternative, look into the royalty funds that trade on the TSX e.g. The Keg, Boston Pizza, A&W, etc. It's much more passive as opposed to opening a franchise, think about it - you just dump the capital you would have put in the franchise and get a dividend/royalty ever month.
No kidding! OP being a financial analyst who should be able to do their own due dilly on investing in a franchise aside, if OP is making only $60k+/yr then unless there is some huge inheritance coming, they have access to a huge stash 'o cash somewhere, they are going to win the lottery or they have assets to borrow enough money against then buying a franchise ain't gonna happen.

That 'minor detail' aside and also the fact that potential franchisees are extremely vetted, especially for the in-demand ones where you actually might make a profit, operating a franchise, especially in the early years, is not an absentee-owner type of deal. You ain't gonna be successful working full-time and then attending in the evenings to see who stole from the till or ate some of the inventory...
Sr. Member
May 12, 2014
874 posts
350 upvotes
Montreal
hi_rbais wrote:
Nov 16th, 2017 8:10 am
Hi. My request to OP is to not sign any kind of personal guarantee with landlord
In any good location, the landlord will almost certainly insist on a personal guarantee.

Only way to avoid it is if your business has a very long track record, or if the location has many empty stores (ie, not an "A" location)

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