The economic forecast for 2024 is about as clear as a rambling politician. Nobody knows what to expect, especially when it comes to their careers. So, why put your financial future in someone else’s hands when you can control your own destiny? Now, perhaps more than ever, seems like the right time to consider being your own boss and pursuing a new entrepreneurial endeavor. If you’re wondering, “Are franchises a good investment in 2024?” The answer is undeniably yes, as long as you’re business minded and tired of being subject to another company’s constant threat of layoffs.
Should You Be Concerned About Royalties and Fees?
Owning a franchise means you pay a royalty to the franchisor in exchange for the exclusive rights to sell their brand of products or services. You should also expect to pay fees for site assistance, training, distribution, and the rights to sell new products and services.
Depending on the industry and the individual business, royalties usually consist of somewhere between four and six percent of the business’s gross sales revenue. This is where it really pays to do your homework. Some less reputable businesses have been known to charge much higher royalties. If you perform due diligence and invest in an established brand with a solid reputation, you won’t need to worry about this.
Fees are another small cost to consider. When buying a franchise, the first fee you’ll encounter is the franchise fee. This is the initial investment you would pay in exchange for the company’s proprietary knowledge, resources, and assistance. The franchise fee will vary greatly depending on the business you invest in. Keep in mind, however, that financing is available. You can choose to enlist the services of a financial institution to help with this or go directly to the franchisor.
In the end, you’ll likely realize that royalties and fees are mostly inconsequential. If you were starting your own business with no support, you would likely pay third parties for consulting and other services that would cost more. Instead, you know exactly what the fees you’re paying for actually do. They get you set up in a great location, train you and your employees, and help you distribute their brand among other things. Royalties and fees lay the foundation for the franchise profitability model.
What’s in It for You?
The franchise profitability model is a win-win situation, where the franchisor makes money by receiving the previously mentioned royalties and fees from entrepreneurs, like yourself, who buy into their company. You keep whatever is left from the profits of selling their proven brand of products and services. In essence, you reap the reward of their brand recognition.
Customers already know what to expect when they buy a cup of coffee from Dunkin’. They know what the coffee will taste like and they have come to expect a certain level of service with most interactions. Customers, however, have no idea what to expect when they purchase their morning fuel from an unknown provider. The coffee might be too strong or too weak, and the employees might not be properly trained. This is the biggest reason for investing in an existing business with a proven track record.
You also gain the franchisor’s never-ending support and service. Your success is their success, so they will be willing to support your efforts with training, technology, and information whenever you need it. The more you succeed, the more money they make in those royalties we mentioned earlier.
Are Franchises a Good Opportunity for Growth?
When thinking, “Is a franchise a good investment?” you might share some common concerns with other entrepreneurs who have since overcome their initial fears to achieve financial freedom. For example, many people make the mistake of thinking that the business model is somehow limiting as if there were no opportunity for growth. In fact, just the opposite is true.
It can be extremely challenging to build a business from the ground up and scale it. Suppose you’re opening a new tax filing service. You may be able to open and operate a single location that earns a steady, yet unspectacular profit. Growing that business into multiple locations, however, is an entirely different story. You have no support in the form of site assistance, financing, or advertising to gather a customer base in the new location(s).
As a franchisee, however, you can lean on assistance from the franchisor in those areas. If you show them that you’re a savvy entrepreneur by exceeding expectations in one location, they will be delighted to help you open a second location, as well as a third, and a fourth…
Many people who buy into an existing business choose to open multiple locations. Therefore, the room for growth is abundant. If you have dreams of owning and operating many locations to achieve financial stability in any economy, you won’t be wondering, “Are franchises profitable?” Instead, you’ll be visualizing how fortuitous they can be.
How Much Money Can You Make?
Your annual salary, as a franchisee, can vary greatly depending on the exact business and industry. Entrepreneurs with vision, however, can expect to amplify their profits when they grow the business.
If all you’re interested in is owning one location and earning a nice yearly salary, that can happen with just about any existing business you buy. There’s nothing wrong with that. If, however, you want more, expansion is only one way to make your financial future a bright one.
Another option to consider is the ability to sell your franchise several years from now. Let’s say you buy a business, run it successfully, and expand it to several locations. Your startup costs may have been minim whenen you bought that first location. But, because you worked hard and made smart decisions, the value of all your franchises could have exceeded several hundred thousand dollars or more.
Ten or twenty years from the point of your initial investment, you might decide that the time is right to sell your businesses. From there, maybe you reconsider the same business model. You might think, “Is buying a franchise a good idea again?” Of course, you could retire at a pleasantly unexpected early age to enjoy all that life has to offer.
Is There an Untapped Choice for Industry in 2024?
The tried and true franchises like Mcdonald’s and Dunkin’ fall into the “no-brainer” category of money makers. The problem is, you need to already be a millionaire to buy into the golden arches and other fast-food businesses require hundreds of thousands of dollars at a minimum.,
If you agree that franchising is a career path worth pursuing, but don’t have a half-million dollars or more to spare, plenty of other great opportunities are available. The insurance industry, for example, is one choice that is relatively untapped and readily available nationwide.
Contact Freeway Franchise at (877) 822-3024 today, or fill out our online form for more information about one of the best franchises to own anywhere. We have the experience, expertise, and everything else you need to get your new career up and running before the ball (or the market) drops on New Year’s Eve.
