Global Resorts Network: Perpetual Leverage v. Franchise Ownership
“I’ll take one pound of smoked turkey and two – no make that one – pound of thinly sliced honey ham,” said a frail elderly woman who was stooped over the cart of groceries she had pushed over to the meat counter.
Sam sighed as he picked up the remaining pair of latex gloves. It was a warm, busy day. And he was relieved that Mrs. Habersham was his last customer. Usually he didn’t mind filling in after butchering for the day, but today seemed so long and boring.
Pulling out of the store parking lot, Sam began to muse over the situation. How could he make more money? What skills did he have other than butchering?
Then while stopping at the last intersection light, his eyes focused on a scene at his local sandwich shop. “Look at that guy’s carryout bag – must be dinner for the family,” he thought. “And that elderly group is heading in for dinner.”
Sizing up the place, Sam said to himself, “It’s pretty clean, and business seems to be solid. Every night on my way home from work, in good days and bad, that sandwich shop always has customers. And all sorts of people hurry inside to order their dinner – moms, managers, kids. They are satisfied. The proprietor is, too, and do I ever wish that I were that proprietor!”
Maybe Sam’s dream is impractical, but he has it, nonetheless, and he’s probably not alone. How about you? Do you ever think of owning your own chain restaurant, car shop, or retail store?
You can decide if franchising is right for you by asking some of the owners of your local franchises what drawbacks they deal with. (Bring a pencil and paper.) But to get you started, let’s compare some of them to a standard home business.
First, let’s compare typical investment requirements. Franchise investments usually cost between $60,000 and $500,000. This includes fundamentals such as your land, building, machinery, and office equipment which is a considerable amount of capital, especially in today’s uncertain economic times.
A good home biz will cost you much less, for you won’t have the added costs of land and building. Expect to invest between $1,500 and $3,000.
Second, let’s compare standard operating expenses. In a franchise you have to pay employee payroll, payroll tax, workers compensation, insurance/inventory, liability insurance, utilities, freight/postage, ad valorem tax, licenses/permits, advertising, telephone, franchise fees, depreciation, and sales tax just to keep the lights on.
In a home biz, your costs are significantly reduced but still extant. Remainders include liability insurance, utilities, telephone, advertising, and depreciation (e.g., office equipment).
Third, here are more things to keep in mind: Your gross franchising profit generally averages 30-40% with a net profit of around 5-10%. You will work at least 50 hours per week-closer to 70 and maybe even more. You shoulder 100% of the risk factor and leverage none of the compensation from others-that’s what you’re doing for your chain store. You will have tax advantages, but these will be offset by your unchangeable time commitment, need to supply products, and confinement to a fixed location as well as limited income potential which averages out to $35-85K.
With a good home biz, you can make more gross and net profits working a flexible schedule and leverage your income to unlimited potential.
The light turns green. As Sam pushes the accelerator, what would YOU tell him to do?
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Tagged with: Affiliate Marketing • global resorts • global resorts network • grn • home based business • home business • internet business • network marketing • online home business • perpetual leverage • reverse funnel • work at home • work from home
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