This content provides a comprehensive guide for individuals considering buying a franchise, emphasizing crucial factors beyond the initial investment, such as personal motivation, financial readiness, strategic decision-making, and long-term planning.
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did you know that in 2018 there were
over 750 9,000 franchise units that
generated over 760 billion dollars in
sales and employed over 8 million people
my name is tarick Johnson and I own two
franchise locations that are 2400 miles
apart from each other and in this video
we're gonna have an honest conversation
on whether you should buy franchise
first let me tell you what this video is
not this video is not a solicitation or
sales pitch for you to invest in any
franchise or business deciding to invest
in a franchise could be the biggest
decision of your life and in this video
I'm gonna cover exactly what I believe
you must know about owning a franchise
from a franchise owners perspective
before we get started go ahead and drop
me a comment below and ask me any
question that you have about the
franchise process I do my best to
respond to all the comments personally
also give this video a like down below
and subscribe to the channel I'll be
posting videos every Monday Wednesday
and Friday sharing with you my learning
experience of owning my two franchise
locations as well as having worked with
over a thousand clients personally as a
financial advisor and traveling the
country as a speaker for Tony Robbins so
let's get started so number one is why
do you want to buy a franchise are you
looking to replace your full-time income
and leave a full time job or a corporate
job and and own a franchise to
completely support your family are you
looking to just create an additional
income stream and have something for
retirement or just create a part-time
income and find somewhere that you can
invest your money in or are you looking
to build real wealth and try to get rich
from owning a franchise when my wife and
I made the decision to invest in our
first franchise it was going to be a
significant investment and the reason
why we were deciding to invest in a
franchise is because I eventually wanted
to leave my work as a financial advisor
and we wanted to do something that was
in a Parcells
in the best
position to have an existing income
stream that was already going so that
way when I made the transition we would
be in a really strong position deciding
your why or why you might want to buy a
franchise will literally affect every
other decision that you make along the
process it will decide what type of
franchise that you invest in whether
you're gonna wind up being an absentee
owner or be active in the business what
industry you're gonna get involved in
are you gonna get involved in a
service-based industry this is going to
decide everything for you and it's
really important to be very clear about
what your objective and why you want to
own a franchise business number two is
money so the average franchise costs
about two hundred fifty thousand dollars
to get up and running and look that is a
very important number to think about
obviously if you're looking to open
something like a Taco Bell or McDonald's
or KFC or Burger King you're gonna be on
the higher end
I mean franchises can range from ten
thousand dollars all the way in the
millions of dollars to get open and that
should scare you because people have
lost a lot of money investing in
franchises investing in the wrong type
of franchises investing on the wrong
brands and not running them well so
money is something that you really have
to think about and ultimately your
financial situation will really
determine what direction you can go with
franchise's most franchise ORS have a
net worth requirement they require you
to have a certain amount of liquid money
as well as a certain net worth in order
to even qualify to be able to purchase
one of their franchises there are
cleaning businesses that are as little
as ten thousand dollars to invest in
those are likely going to have less of a
net worth requirement but keep in mind
the lower the cost of the investment for
the franchise the more effort and work
you'll likely have to do on the front
end in order to get that franchise up
and running so if you invest in that
that cleaning franchise that was an
example you'll probably have to hit the
ground a network and Dornoch and
prospect and do all these things in
order to get customers for that
franchise business now if you don't have
any money to invest then I've actually
made a video on exactly how you can't
invest in a franchise with no money so
I'll link that up in the description
below and go ahead and check that video
out guys the last thing to cover about
the money part is that investing in a
franchise is a really really serious
decision as I mentioned before there are
people who have lost a lot of money
they've lost their life savings
investing and franchises because they
didn't know what they were getting into
going into step number three is thinking
about buying an existing location verse
a new location the reason why this is
something really important to consider
when thinking about if you should buy a
franchise is because if you buy an
existing location that already has
customers already has sales is already
generating a profit then the likelihood
of you succeeding goes much much higher
because you have all of those things in
place and you're usually paying a price
for the business that's based on the
amount of profit that it's generating so
as long as you don't come in and screw
something up or there's not major
competition that opens up then it's
usually going to lower your risk and put
you in a better position in succeeding
now when you're talking to a franchise
company you should ask them if they have
any existing locations for sale
oftentimes they're not gonna volunteer
that information because if you think
about what a franchise company is really
interested in oftentimes is they want to
get new locations opened up when
franchise companies talk a lot about
growing same store sales or same unit
sales then they're really focused on
increasing the sales for existing
franchisees and and that's when you know
that a franchisor really has the
interest the best interests at heart
for existing franchises now the other
option is that you can invest in a new
location and so obviously investing in a
new franchise location carries a higher
amount of risk associated to it because
you don't have any customers you are an
established yet you don't have any staff
you don't have any processes and you
have any operations now there are
benefits to opening up a brand new
location you might be able to lock in a
really good location for your business
that that's in a really great area there
might not be any competition in the area
that you're looking to open your
franchise in so you really have to weigh
the pros and cons versus opening up a
new location or binding buying an
existing location when my wife and I
opened our first franchise location we
were really nervous about it I mean it
cost around three hundred thousand
dollars to get that first location
opened three hundred thousand dollars is
obviously a really big investment so
what I did was I was really strategic
about the actions that I took and the
way that I thought about the processes
of us opening and we were actually able
to become profitable our second month in
business so in less than 60 days we were
able to turn a profit in her franchise
this was huge and hoping to alleviate
some of those fears and those nerves
that we had around the franchise
business and made us feel a lot better
about the decision that we made if
you're interested in knowing how I
actually got the business profitable in
60 days I documented that entire process
and created a free seven step blueprint
to how I became profitable in 60 days
I'll drop a link for that below - it's
totally free make sure you grab it
it'll be really helpful whether you own
a franchise or a business that isn't a
franchise because those steps are
applicable to any type of business so
one thing to mention about existing
locations and the immediate cash flow
that they provide is that there's also
another really big benefit and
potentially buying an existing location
and I'm gonna share that with you and
step number five so make sure you stick
okay number four and if you should buy
franchise is you now what do I mean by
that the most important aspect to you
succeeding in a franchise or failing in
a franchise is you now when I say that
think about it it starts from the
process of selecting the companies that
you are looking at and possibly
investing in starts with the questions
that you ask the process that you go
through the due diligence process the
research that you do the location that
you pick ultimately the constant
throughout all of that is you if you
have a track record of not being able to
make good decisions then that might
affect your ability to succeed as a
franchise owner and when you're putting
up a lot of money to get involved in a
business then you really need to do a
self analysis and a gut check to really
make sure that you are going to be up
for the challenge
now another thing to consider is what
your skill sets are it's really
important to make sure that you're
aligning a possible franchise
opportunity with the skill sets that you
currently have now does that mean that
if you're planning on opening a food
franchise that you have to know food and
be good at food absolutely not
my background is in motivational
speaking and financial advising and I
have to juice bar businesses I had no
background in that whatsoever although I
was really passionate about a healthy
lifestyle and making juices and
smoothies and different things like that
what I did have a strength in was the
financials of a business operations and
really finding and recruiting talent and
managing that process so I felt
comfortable in owning a franchise
because I'd be able to follow the system
so another thing to think about is can
you handle your bligh style potentially
getting disrupted franchises and owning
a business is filled with challenges I
mean if you own a business right now
then you know what I'm talking about a
crazy story that happened was the day
before my wife and I were getting ready
leave and move across the state in the
middle of the night someone broke into
our business along with the number of
other businesses in our shopping center
shattered the windows I mean just made a
mess it was a crazy situation stuff like
that may not happen often hopefully that
never happens to you and it might not
ever happen to you but our life was
completely disrupted for those two days
and then my life was completely
disrupted for the next few weeks
handling the insurance claim and the
process and all the things that happened
as a byproduct of that break-in if
you're used to the normal comfort of a
corporate job where once you leave your
job you get to put it aside and you're
not really disrupted at home I'm really
thinking about investing in a franchise
is something that you have to take a
really deep look at because it's
possible and likely that your normal and
current lifestyle will be disrupted in
some way and so the question really
becomes is the rewards that you'll get
from that franchise worth the lifestyle
disruption that will occur and when I
say rewards I don't just mean financial
rewards because even if you make the
same amount of money that you're making
in in another job or in another business
if you have the freedom and flexibility
to be able to set your hours and spend
more time with your with your friends
and family or go on more vacations then
that's a benefit that you really can't
attach a number to and it's a very
intangible benefit but it's really
important to note that they're likely
gonna have to be some sacrifices made if
you do own a franchise and it's not just
the life of glamor there are a lot of
real challenges it's not anything that's
sexy and it could take you a number of
years before you see the fruits of your
labor really kick in okay number five so
I know I said before that number five
we're gonna be a really important topic
I actually forgot something so I'm gonna
move that to number six so make sure you
continue or watch and I'll tell you in
step number six number five is following
the system so when you buy a franchise
the whole point
franchise is that you were buying the
name the process and the system and you
really have to be a person that is okay
with following the rules and the system
if you're someone who really doesn't
like to be told what to do and doesn't
like Authority and I don't really want
to use a thority because a franchise or
you don't really want to see them as an
authoritative figure but if you're
someone that doesn't traditionally
follow the rules and likes to do things
on your own and it really kind of thinks
outside of the box then then maybe
buying a franchise isn't for you maybe
you should start your own business
instead because the whole point of
buying a franchise is following the
system and if you don't follow the
system and you start doing things on
your own it's possible you can get in
trouble with the franchise company you
can get fined or even sued I have known
franchise owners who started to break
the rules with a franchise company and
they really refused to stop doing it and
really got themselves in a bad situation
with the franchisor then things just
really aren't good from there so it's
really important to make sure that you
have the ability to follow the system
follow the process and if that's not
something you're interested in then you
should not buy a franchise now that
doesn't mean you can't be creative and
use your own ideas and your own talents
and skill sets obviously you're owning
your own business and so every day
you're gonna have to use your own
strengths and your skill sets in order
to make sure that that business is
successful but you're doing that within
the operations of the system and the
processes that are used now what I would
recommend is talking to existing
franchisees within the system and asking
them about how flexible and how open the franchisor
franchisor
is to new ideas ideas that franchisees
come up with and implementing them into
the business so number six and the last
thing that you should consider when
thinking about buying a franchise is
drumroll your exit strategy now real
quick if you're still with me make sure
you hit like on the video
and subscribe to the channel it really
helps other people see this information
and I'm gonna be putting out really
amazing content around franchises
franchise ownership and again what I've
learned and the mistakes that I've made
so in thinking about your exit strategy
I'm a firm believer that you should be
committed to whatever you're doing when
people aren't committed that's
oftentimes when they fail but it's
important to think about an exit
strategy with a franchise because you're
owning a business and number one you're
not gonna live forever and number two
things could go wrong and changes could
happen in your life where you either
want to sell or get rid of the business
and it's really important to think about
what that looks like and start with the
end in mind because that will help
determine what decisions you make and
even buying a franchise or and how you
run the franchise during the time in
which you buy so do you plan on
receiving an income for as long as
possible with the business and then
selling the business at that point or
passing it down to a child or grandchild
or a family member do you plan on
getting the business profitable or
growing profits and then trying to sell
the business so it's really important to
think about what your exit strategy is
with the business because again that's
going to drive your decisions that
you're making so what happens if the
business isn't going how you planned it
what if you don't like it what if you're
not succeeding what if you aren't making
money these are all things that you have
to think about when buying a franchise
so that you can be prepared and equipped
to handle those situations one of the
things that I would highly recommend is
to take a look at either existing
locations within that franchise that
you're looking at or within that
industry and see what they what they
sell for what are they priced at where
do they price that based on the profit
margins that they're making
what are they priced at based on how
much it costs for those locations to
bail out to build out oftentimes you'll
be surprised that a lot of franchises
have really poor resale value and so if
you plan on only having the franchise
for a few years and selling it you
to put yourself in a position where
you're losing a lot of money this is one
of the things that is really really
really really important to think about
is your exit strategy and what's your
plan and the more research you do on the
front end the more you're gonna be
prepared on the back end so guys thanks
for sticking it out with me all the way
to the end I hope you enjoyed this video
go ahead and share it to someone who
could benefit from it and again make
sure you leave me a comment on any of
the franchise questions that you have
and I'll make sure to do my best to
respond to them personally I'll see you
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