One of my favourite topic is franchising. I read about and heard about many people who got retrenched in their 40s or 50s went into franchising business and ended up losing their life savings. Frachising is like any other businesses. The difference is that in franchising, you are buying a "working system". However, you also must remember that you are paying for it (usually at a very high cost.)
I had spent about 6 months exploring various franchising opportunities. I spend 6 months talking to 5 franchisors and surveyed no less than 30 sites in Singapore. What I found was that to find a good location is very difficult. I was exploring F&B retail business. This kind of business is heavily dependent on location. There three key words to success: Location, Location & Location. Nothing else.
In Singapore context, typical F&B franchise cost about $200K to $250K. Because of large capital outlay for ordinary people, I never encourage people to take up franchise. I have visited many franchisees and I calculated their earnings etc. I belive only top 10% of franchisees are making good profit. Another 30% are making some profit. Yet another 40% are just above the water. The rest of them, 20% are under the water.
One of the biggest problem of franchising is that you lose the freedom to shape your business. You are not different from working for people. The difference is that you have to pay to work for people. You really need to choose very carefully in franchising. Make sure that the franchisor is of good reputation and the system really works. Go for proven systems like Subway, 7-Eleven, you will have better chance to succeed. Other good franchise maybe Kumon (children education) but all these needs good location. I can emphasise more, Location, Location & Location.
Sometimes, you'd be better off to start a small store run it on your own. In that way you can have your freedom to shape your business.
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