How Much Money Can You Make With a Franchise Opportunity?

How Much Money Can You Make With a Franchise Opportunity?

When searching out a franchise opportunity, one of the most difficult pieces of information to get from the franchisor is the amount of money you can make with their franchise opportunity. This may be frustrating because most people are not going to invest in a business until they have a fairly accurate idea of what they can earn. In most cases the franchisor is not purposely being difficult. The Federal Trade Commission (F.T.C.) and many states have stringent regulations as to how franchisors can provide this information to prospective franchisees. However, there are ways to get this important information.

Many franchisors used unjustified or misleading earnings claims to sell their franchise opportunities, so in 1979 Congress passed legislation authorizing the F.T.C. to regulate the franchise industry, with an affort to try and stop any such bad practices. Many states also passed similar legislation. The current F.T.C. and state rules do not forbid a franchise company from supplying information about the earnings that can be achieved in their business. They do, however, regulate how the information is given to a prospective franchisee.

The Franchise Disclosure Document (FDD) contains a lot of information and that is where the franchise provides their earnings claims, so it's in writing. It is also essential for the franchisor to make sure that the information provided is accurate and not misleading. They (franchisor) need to clearly label any assumptions or qualifications on the data provided.

A franchisor is free to provide whatever earnings information they want to a perspective franchisee in terms of sales, expenses, cash flow and income, assuming they meet the legal requirements.

Once you have earnings data, your next question will be whether the probable earnings represent a good return on your investment.

If you are going to invest in a franchise opportunity, you are not only investing both your time/talent, but also your hard earned money. With that in mind, you should expect a greater return on your investment (ROI) than you would for a more passive investment, like your money only.

So what is a good ROI? If a good return on a money only investment is 10% to 15% per year, you'll want to see a greater return with a franchise opportunity. After all, is your time worth anything? In my opinion, the time you invest into your new business should yield a return at least equal to the return on the money you invest. Don't you think that is fair? Now, this may not happen the first year but it certainly should in the years to come.

Another important point to ponder, a higher franchise opportunity investment does not mean a higher rate of return. Although this may seem contrary to common knowledge, there are plenty of low to mid-range franchise opportunities that provide a greater return on investments. Do yourself a favor; don’t limit yourself to high-investment franchises only when seeking a business with a high ROI.

The amount of money you make as a franchisee depends on a lot of factors, like the structure of the franchise, how long the franchise has been in operation, how well you understand and embrace the system, how enthusiastis are you for the business, and how will it help you to achieve your dreams. With a little research you will be able to get enough information to decide if this franchise opportunity makes financial sense to you.

Jeffrey Sloe, Internet Marketing Advisor to The Ultimate Team
440-725-3729
jeff@internetmarketingadvisors.net
http://ultimate.org