Franchise - Is it the right business to make big money?

[CanadaHomeV]

Hi All,

I'm a Canadian citizen and not a new arrival to Canada (but my wife is....). We're moving to Vancouver (after few years abroad) where I'm thinking of buying a franchise such as MIDAS, or Tim Hortons... As you can see, no specific category in my mind but just one goal: Generating the biggest net income possible! Only 1 problem: Have no clue about franchises! I've been Manager for over 15 years and I think would qualify for most of the franchises, but just starting my researches. Have a lot of questions that I hope someone could help me with:

Do you recommend buying an existing franchise and how to check the figures announced by the seller/franchisor such as Normalized revenues, EBITDA/SDE?

Which franchise would you recommend for a great net result?

Thanks.

[ScottK]

Be careful about choosing a franchise solely on the income you expect to make from it. Owning a business is hard work and it will be difficult to get through the lean times if you don't have a passion for what you are doing. Having said that, owning a franchise can be an excellent choice for the right person.

You'll want to pay special attention to your return on investment (ROI). Some of the smaller franchise opportunities offer no more return that a regular salary for the owner. Being in business is risky. If you are going to make an investment it makes sense that you should earn a good return on that investment to compensate you for the risk you are taking. It doesn't make sense to just get an average salary out of your business when you could just take a job, make no investment, and lower your risk.

Buying an existing franchise location could be a good idea but you have to do the same level of due diligence that you would do when purchasing any business. I have a post on my blog about the some of the specifics that should be considered. Click through to the site in my signature and click on the blog tab to read the post.

[CanadaHomeV]

Thanks a lot. This has been very helpful. I read your post as well and it gives excellent guidance. I've been doing a lot of reading lately about franchises and talked to many professionals (lawyers, auditors...) and I know that I'll have to do a lot of investigations with the help of some professionals also to make sure that I know where I'm going and what risks I'll be taking.

I'm trying to stay away from types of franchises that we can find at every corner, and I'm searching more for the kind of franchises with the less competition possible. Not found yet...

[Aquib]

Thanks a lot. This has been very helpful. I read your post as well and it gives excellent guidance. I've been doing a lot of reading lately about franchises and talked to many professionals (lawyers, auditors...) and I know that I'll have to do a lot of investigations with the help of some professionals also to make sure that I know where I'm going and what risks I'll be taking.

I'm trying to stay away from types of franchises that we can find at every corner, and I'm searching more for the kind of franchises with the less competition possible. Not found yet...

What about subway , pizza hut , kfc etc.
They got good ROI ?

[dcpaley]

You have to look at each one on a case-by-case basis. There would be no standard rule.

If you're interested in a few, make some inquiries ask some questions, get an information package and hire an accountant to help you decide.