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Franchisors are not allowed by law to predict what you might earn as a
franchisee in their system. They can share the profitability of the
franchise company owned stores, but that information must be in writing and it
is usually found in the franchise offering brochure. Under no
circumstances is a franchisor allowed to verbally make earnings projections to
you.
The selling of franchises is a business within itself. Running the
franchise and earning a living from it is entirely different. The reality
of franchise earnings for individuals is not as bright as many people would like
you to believe. Its true that the success rate of franchises is higher
than of individual small businesses. The past chairman of the American Bar
Association's Forum on Franchising estimates that only one third of an average
chain's franchises does well, another third breaks even, and a third loses
money. Profits can be anywhere from negative to over $100k for one store.
However, the average is probably somewhere in the middle.
The income earned depends largely on the type of person that purchased the
franchise. If the person bought the franchise because they were recently
laid off, they did poorly. There are a number of other factors involved.
This does not mean that it will happen to you, but do your due diligence before
signing over your life savings.
Many franchisees are now leaning towards multi-units. Having more than
one franchise means that you can earn more. If one store makes $20k a
year, then 3 or 4 could possibly mean $80k a year. You must have excellent
organizational and management skills to have multiple units.
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