The capitalist’s best friend is an investment opportunity requiring low cost but with the potential for great returns on the initial principal payment, right? Why not consider buying into a franchise system? Franchising is quickly becoming one of the most popular business practices these days. Generally, a franchisee (the person who purchases a franchise from a franchisor) pays an upfront fee followed by regular royalties in exchange for the rights to a business. The benefits? You have your own business to manage how you’d like (though you have to follow some basic rules and guidelines) and your business profits from the hopefully positive reputation of the franchise from the moment it becomes yours. What’s more, you already have a business model you can expand from!
The top ten most popular franchises (according to CNNmoney.com) are:
- Subway – 7% failure rate.
- Quiznos – 25% failure rate.
- The UPS Store – 12% failure rate.
- Cold Stone Creamery – 31% failure rate.
- Dairy Queen – 8% failure rate.
- Dunkin Donuts – 8% failure rate.
- Super 8 Motel – 4% failure rate.
- Days Inn – 6% failure rate.
- Curves for Women – 16% failure rate.
- Matco Tools – 36% failure rate.
But make no mistake about it, despite the many advantages to entering this business, it’s no walk in the park. Many find themselves slaving away for years just to break even. Another problem one can run into is limited growth potential and territorial disputes (many franchisees are unable to expand due to geographical restrictions determined by the franchisor).