Franchising: The Quickest Way to Build Net Worth

There are many that try but are unable to reach their goal of the American dream of owning their own business. We acknowledge that every business has its problems to overcome. There will be headaches, dealing with employees, making payroll and taking care of the unruly customer. With a franchise you have the help and support of the franchisor to assist in dealing with business problems. The bottom line of this story is that the quickest way to build your personal net worth is through business ownership. And the best way to build and own a business with the least amount of risk is through franchise ownership.


The Analysis


Included with this report is a chart entitled, What is Your Best Long-Term Investment which summarizes the various main investment strategies. After careful analysis of the most common investments it is clear where the best chance of increasing your net worth lies. The three main investment areas are as follows:


  *Typical Investments

  *Real Estate

  *General Businesses


In the Typical Investment category, we include bank accounts, stocks, bonds, cash-value life insurance, commodities, mutual funds, precious metals, annuities, rare coins, other collectibles and just about anywhere else you can invest your money and watch it grow as a result of interest or an increase in value. Over the past 60 years, even during its ups and downs, the stock market has yielded the best return of 11% to 12% depending on which study you look at. For those not able to handle a higher level of risk, it might be best to invest your money consistently in a stock market index fund and leave it there for the 10, 20 or 30 years it will take to give you a consistent 11or 12 percent return through the ups and downs of the market. Even with this relatively safe investment strategy, there is still some risk.


Many people have used real estate to make their fortunes. But for the many who have made their money in real estate, there is a much larger percentage who have not. There is risk involved with this business. Can you keep your property rented? What happens is the renters tear up the place and leave you with the large repair bills? What happens if a major appliance goes out? If everything works perfect in your real estate investment, you get a good return, typically 60 to 70 percent as outlined in the chart, but for most investors, everything will not go as well as they would like.


In the area of general business, we have categorized them into four different areas


*  Direct Sales/MLM – in this type of business, the operator must use selling skills to sell their product or service to personal contacts. If you don’t’ enjoy selling (like the majority of people) this type of business will be very difficult. Your chance of building a large successful business in the manner is less that 4-6 percent.


*  The second way is to start your own business such as a retail, service, distribution of manufacturing type business. These businesses require typically more start up capital and more overhead than the direct sales business. Your chance of success is better, usually between 20-25 percent.


*  Some prefer to buy an existing business that already appears to be successful. In many cases when you buy a business under $250,000 you are buying something where profits have already peaked and it is on its way down or you are buying the problems that someone else has started and are often hard to correct. Many business sellers have a tendency to inflate the actual cash flow of the business so that when the new owner takes over, the cash flow is not performing as expected and financial problems can occur. Often times the owner will take cash under the table and not report it on the income tax return. This type of cash is hard to track and is often overstated. By purchasing an existing business under $250,000 you have less than a 60% chance for success.


*  With a franchise, you can start out fresh and have a new business set up the way you want it. You don’t have to take over someone else’s problems. You start out clean. Your success rate with a franchise is the best of any business at 92%. If you find the right franchise and are a good operator, your franchised business will be the best investment you can make for long-term gain and personal satisfaction.


Franchising is the best and lowest risk business investment. Let’s examine why.


The Franchise – An Inside Look


In a recent survey done by the International Franchise Association, we learn that franchising as a whole has a 92% success rate. For franchisees who own multiple units, the success rate goes up to 97%. Increased market share equals increased profits and franchising is the best way to gain market share. Right now retail franchises represent only 8% of the retail businesses. However, the retail sales of those franchise represents over 40% of total retail sales making franchising the best way to capture market share and profits. Other franchise research shows us that:


  • *  93% of the franchisees say that a franchise gives them an advantage

  • *  88% of franchisees recommend a franchise over a non-franchised business

  • *  83% are happy with their franchise

  • *  65% would purchase the same franchise over again

  • *  The average net income for a single unit franchise is $76,000

  • *  The average net income for a multi-unit franchisee is $142,000


In short: “Franchising is the single most successful marketing strategy ever.”
John Naisbitt, Author, Megatrends


As far as we have been able to determine there are over 4,000 franchise opportunities available in the United States today. If business ownership is for you, then most likely a franchise is your best vehicle to achieve financial independence in the least amount of time. The only thing you need to decide then is which franchise is best for you. Often the best way to find out about the franchises and to save you a lot of time is to spend a brief period of time with a franchise consultant who can help you cut through the volume of franchises and get to where you want to be with much less time and expense.