You’ve been thinking about becoming a business owner for a while. The problem is, you don’t have a lot of money to spend on a startup. You also have no marketing experience.
Why not invest in a business that already exists? Not only will the company heads take care of the marketing for you, but the average franchise owner salary isn’t anything to sneeze at.
Of course, how much you make and how successful your franchise is, does somewhat depend on you. If you don’t have the work ethic needed to get things done, you’re not going to get too far.
Check out this guide to find out what factors go into a franchise owner’s paycheck, and learn if it’s the right avenue for you to go down.
Table of Contents
Why Should You Become a Franchise Owner?
Before we start taking cold hard cash, let’s discuss the advantages of franchise ownership. Why is taking on another company so much more lucrative than starting a business of your own?
Everyone Already Knows About You
If you start up your own business, you have to take some time to market yourself. You’ll need to spend money to build a website and come up with a successful SEO strategy to get the word out about yourself.
Franchisors do all this work for you. Everyone and their mom know what a McDonald’s is. If you own one, you’re going to bring in the locals based on name alone.
You Don’t Have to Worry About a Business Plan
Before opening your own company, you’ll have to come up with a business plan. It’s a blueprint that highlights everything there is to know about your company.
You’ll jot down how you’re planning to finance the business, what your goals are, where you’re going to place your building, and much more.
When you take on an established franchise, the business plan is already there. You’re only doing your part to carry it out.
Tried and True
Owning franchises can feel stressful until you realize how much training the company is going to give you. The franchisors aren’t going to put you in charge until they think you can handle it.
It’s not only you that’s going to get training. They’ll take care of your employees as well. All the videos and pamphlets will be provided by the company.
All you have to do is follow the standard business operations that have been put in place for years and make sure that your workers do the same.
How Much Can You Make as a Franchise Owner?
Now it’s time to get down to business. How much will franchise ownership get you? Can you get rich off of it the same way you would if you were owning your own company?
The truth is, it depends. Some of the most successful owners make over 120,000 dollars a year. That’s nothing to turn your nose up at.
Let’s say that you’re in a location where you have a lot of competition to worry about, however. You might end up not being as profitable as you would like. There has to be demand for your product or service for you to make money.
Factors That Will Influence How Much You’ll Make
Let’s say that you’ve always wanted to own a senior home. You’ve done your research to learn more about what it takes to make it happen, and you’re pretty confident you can handle it.
You can still fail if you don’t have the proper management experience. Your workers and inventory are also going to play a huge factor in how much money you make from your franchise.
The franchisor will teach you everything you need to know. That includes how to manage your stock so you can meet the demands of your customers.
Don’t be afraid to make adjustments to minimize costs if you have to, though. If a certain product isn’t well at your retail business, you don’t need a lot of it on your shelves.
Your Management Experience
Again, one of the benefits of owning a franchise is the fact that all the groundwork is done. All you have to do is follow along with the guidance of the franchisors.
They can’t do everything for you, though. If you’re barely at the location and push all your duties off on another worker, you’re not going to be too successful. You’ve got to have a strong work ethic and know a little bit about being a business owner to get anywhere.
You’re not going to attract many customers if your staff members have a bad attitude. You need helpful individuals who greet everyone with a smile.
To this end, it’s okay to be choosy about who you hire. Keep searching until you find qualified people that can bring something to your franchise.
How to Maximize Your Profits
The better you get at minimizing costs, the more profit you’ll earn. Here are a few ways you can maximize the amount of money your franchise makes.
Buy the Right Franchise
The first rule of thumb is to look for a profitable franchise. You don’t want to buy into a department store if there’s not a real demand for it in your area.
If it helps, the most successful franchises are restaurants. They have the potential to earn thousands of dollars more than other types of companies. We say “potential” because again, some of it is going to depend on you.
There’s a lot of stress involved with managing a restaurant. If you don’t have the right personality for it, you may find yourself getting a bit overwhelmed.
Your personality isn’t the only thing that plays into how well you can run a fast-food business. Your skillset is an important factor as well.
Up Your Game
Once you get into the swing of things, you won’t have to be at your business 24 hours a day. You’ll learn how to work smarter instead of harder as the chips fall into place.
Until that day arrives, you’re going to have to be willing to put in some extra hours. It’s hard to delegate tasks to your employees and make a profit if you don’t know what you’re doing.
Manage Your Overheads
We’ll get into how much it’s going to cost to own a franchise in a minute. For now, know that it’s a lot. You’ve got tons of overhead costs to manage.
The franchisor isn’t going to pay to keep the lights on. That’s going to be on you. You’ll also have to pay rent, taxes, commission to your franchisor, and salaries.
Whenever you’ve got to restock the business, that’s going to come out of your pocket. That’s why we recommend investing in an accountant. They’ll be able to help you sort through your finances and take care of all the money stress.
Investment Costs to Be Aware Of
We went over a few of the overhead costs that you’ll need to manage in the above example, but that was only half of it. Many franchisors want you to have a little money in your pocket before they’ll put you in charge of one of their locations.
There’s also a franchising fee. You’ll have to give the owners a certain amount of money to earn your right to use the company’s name and trademarked products.
Part of your gross sales is going to go into the hands of the franchise owners. If the company has dealings with a certain vendor, you’ll have to buy from them and nobody else. You won’t have the option to use a cheaper alternative.
Depending on the franchise, you may have to already have a space in mind to put a business. Some companies will throw you a bone in this regard by helping you find one.
Whatever space you choose, it will have to be renovated to meet the standards of the franchise owners. That’s something that you’ll have to pay for.
Most franchises require you to have insurance. The company heads may help you advertise at a national level, but if you want to reach out to the locals, that’s on you.
Understanding Franchise Owner Salary and Everything That Goes Into It
Opening up your own business comes with a ton of costs that not everyone can manage. While it still takes money to buy a franchise, it can be much more manageable.
There are a lot of factors that play into a franchise owner salary, but if you follow the tips that you read here today, you’ll be able to maximize your profits. For more tips that will help you handle the costs of your new company, visit the Finance section of our blog.