Entrepreneurship & Small Business

Is it okay to own franchise but handled by a partner/manager?

  • Last Updated:
  • Jun 14th, 2018 9:29 am
[OP]
Newbie
Nov 17, 2012
8 posts
Edmonton

Is it okay to own franchise but handled by a partner/manager?

Hi all,

I am looking for some investment opportunity. I have a friend who is willing to work as Manager/Partner for the food franchise. He is not able to get franchise ownership given his financial situation. Is it possible that I can be franchise owner but store will be operated by my partner? Any franchise that allows such opportunity? Is it a good idea to own Subway Franchise given investment requirement is around 300k and as per initial research it shows profit margin might be low?

Please provide any advice or comment, thank you very much!
Thread Summary
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30 replies
Deal Guru
Aug 2, 2001
14874 posts
5178 upvotes
My personal opinion is that if you are looking for low priced franchises such as Subway then you are looking to be an owner / operator. An owner alone would have to hire an extremely good manager to take care of the place "like his own" and that requires a good salary. Your investment is in a franchise, for which you can have it taken away from you or due to choices on the part of corporate have profits severely reduced, and I think that's a poor idea if you are not pulling the wage.

I think there would be much better options if you don't want to operate a store.
[OP]
Newbie
Nov 17, 2012
8 posts
Edmonton
Thank you TrevorK. I did some analysis and you are right, if I hire good manager with good salary then I don't see good amount left for me. What are the better options that you suggest for investment and keep my day time job? I know about mutual funds or stocks but looking for something long term which can generate good income for the future years.

Thanks again!
Deal Guru
Aug 2, 2010
12512 posts
3062 upvotes
Here 'n There
From what I have analyzed most franchises are basically buying yourself a job with a huge debt burden attached.
Deal Guru
Aug 2, 2001
14874 posts
5178 upvotes
kksoni82 wrote:
May 29th, 2018 11:03 am
Thank you TrevorK. I did some analysis and you are right, if I hire good manager with good salary then I don't see good amount left for me. What are the better options that you suggest for investment and keep my day time job? I know about mutual funds or stocks but looking for something long term which can generate good income for the future years.

Thanks again!
What's wrong with stocks? What sort of return are you looking for?

It's always good to diversify - for example you do not want all your money in real estate or a specific sector of the economy (e.g. financials). But you can really diversify in securities through things like commercial real estate, different sectors of the economy, different countries, etc.

Passive income is possible, but let's be honest - if passive income was easy and made great returns why would anyone invest in stocks?
[OP]
Newbie
Nov 17, 2012
8 posts
Edmonton
Thanks TrevorK! much appreciated your response.
Deal Addict
Jul 4, 2004
4069 posts
445 upvotes
Ottawa
The other thing to keep in mind is that I've heard many "franchise companies" (not exactly sure how to refer to them) will only sell the franchise to owners who will actively manage them (i.e. they won't sell you a franchise to do what you are proposing).
Deal Addict
May 12, 2014
1272 posts
667 upvotes
Montreal
You could send your friend to work in a similar franchise for a year to learn the ropes. He could make regular reports to you about what's he's learned. Then open your own version. (Pizza place, store, etc.)

You'll also get a feel for whether or not your friend would be a good fit for the job, and how he feels about reporting to you.
[OP]
Newbie
Nov 17, 2012
8 posts
Edmonton
That's true. I got on a call with Subway and other franchise and they want the owner to operate the business. I am not sure how do they validate? I have seen a couple of owner with multiple stores and they do not work in any store other than handling as controller. With my research so far, it doesn't seems good idea to own a franchise that you are not going to run. Even if you have a partner running a business then after paying salary and all other expenses it doesn't left you with good profit margin. The case might be different if you are multi store franchise owner.

Any subway or any other franchise owner? what are the operational cost per month to run a store? I get that it's depends on location and other things but thinking about raw material for food industry that you get from the vendor how much does it cost on average or what is the % it take out of gross sale?
Last edited by kksoni82 on May 31st, 2018 1:24 pm, edited 1 time in total.
[OP]
Newbie
Nov 17, 2012
8 posts
Edmonton
FrancisBacon wrote:
May 31st, 2018 12:11 pm
You could send your friend to work in a similar franchise for a year to learn the ropes. He could make regular reports to you about what's he's learned. Then open your own version. (Pizza place, store, etc.)

You'll also get a feel for whether or not your friend would be a good fit for the job, and how he feels about reporting to you.
It seems good advice and I heard people make more out of running their own business in compare to franchise the only issue is to survive for the initial years..
[OP]
Newbie
Nov 17, 2012
8 posts
Edmonton
Any subway or any other franchise owner? what are the operational cost per month to run a store? I get that it's depends on location and other things but thinking about raw material for food industry that you get from the vendor how much does it cost on average or what is the % it take out of gross sale?
Deal Guru
Aug 2, 2001
14874 posts
5178 upvotes
kksoni82 wrote:
May 31st, 2018 2:14 pm
Thanks but I am not looking for cost to open a franchise. I am more likely looking for operational cost monthly to run subway or other food franchise. More specifically about the raw material or food that you get from the vendors.
to be fair, what the food costs is irrelevant to your investigation.

What is important is what is the average breakdown for sales. For example:
20% labour
15% food
35% rent/space costs
4% marketing fund
4% royalties
....

There is more to these franchises - you often pays royalties, advertising, etc. This is the breakdown you are looking for.
Deal Addict
User avatar
Aug 15, 2015
1104 posts
144 upvotes
Markham, ON
Does your partner look like a happy sandwich artist? Have your partner made you a sub yet to sample?

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