How to Make Money With a Franchise

By Yuzin Win  |   Submitted On March 14, 2014

  

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If you've ever eaten at a fantastic restaurant while on vacation and wished there was the same restaurant in your own town, perhaps they have a franchise you could purchase and open your own! There are plenty of people who have tapped into the franchise market in order to create a profitable business.

A franchise is a company that grants permission to an individual or group of people, authorizing them to perform specific commercial activities. Franchising is a business strategy used in capturing and retaining market share. This business model helps in constructing an image in the minds of potential and current customers about the benefits of the company's products and services.

Franchising allows people to share a proven way of doing business, create brand identification, and helps in the way of distribution and marketing. Basically, franchising involves a strategic alliance between individuals who possess particular relationships and responsibilities and have a common goal to capture and dominate markets.
Essentially, buying a franchise involves investing your resources in a proven business model. You and the other franchisees have a joint commitment to get and hold on to customers. You are legally bound to serve customers using the operating and marketing systems prescribed by the franchisor.

To have a successful run in franchising, it is necessary to comprehend the business and legal implications of your relationship with other franchisees and the franchisor. You have to understand that other franchisers are not your competition, but are your assets in enhancing brand awareness which is mutually beneficial.

The following are a sample of the top franchises to consider. They are ranked based on the initial investment, growth and closure.

1. 7-Eleven

This company was founded in 1927 by Joe C. Thompson, who was an employee of the Southland Ice Company, and began selling bread, eggs and milk in addition to the blocks of ice. He eventually bought the company and started opening convenience stores. 7-Eleven offers a ten year renewable franchise agreement and its royalty fee is negotiable. Franchise fees vary from $10,000 to one million dollars, with its total investment ranging from $30,000 to $1.6 million.

2. Subway

Started in 1965 by Fred DeLuca and his friend Peter Buck in Connecticut with a thousand dollars, this business was started with the sole aim of putting DeLuca through college. The company started franchising in 1974 and currently has operations in 98 countries globally. The franchise agreement lasts for twenty years and is renewable. Subway has an ongoing royalty fee of eight percent for franchises and can cost between $85,000 and $263,000 for initial investment.

3. Dunkin' Donuts

This company owes its origins to a doughnut shop in Massachusetts. It can be found in more than 32 countries globally. They offer over seventy types of doughnuts. This company attracts a royalty fee of five percent from franchisees. The term of agreement is non-renewable. You will have to invest between $300,000 and $1.5 million dollars to purchase such a franchise.

4. Pizza Hut

Founded by Frank and Dan Carney in 1958, the company opened a franchise just a year later. More than five decades later, Pizza Hut can be found in various locations globally. Franchisees have to pay a six percent ongoing royalty fee, a franchise fee of $25,000 in an agreement lasting for twenty years. The individual has to have a net worth of not less than $700,000 and have liquid cash of at $350,000.

5. Servpro

What began in 1967 as a painting entity was subsequently transformed into a cleaning and restoration company by its founders, Ted and Doris Isaacson. This company specializes in offering clean up and repairs after water or fire damage and disaster restoration. Prospecting franchisees have to be worth at least a $100,000 with $85,000 in liquid cash. The franchise fee is $43,000 with a royalty fee of between three and ten percent. The total investment is between $130,000 to $180,000.

If you want to make money with a franchise, consider these top contenders and do research on additional businesses that offer opportunities. The franchise business is a great way to earn a living providing great service and products to the community.

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