Do Your Research Before You Buy a Franchise

By Katherine Fein

Although I get calls DAILY for information about Subway and Quiznos franchise purchases, I never recommend that type of franchise. In fact I try and persuade my clients away from this life altering decision. There are much betters ways of investing money, time, and work.

A sandwich shop (or ANY franchise) needs to be researched thoroughly BEFORE you buy one, and my job is to teach you how. Let’s do the numbers:
If a sandwich store earns $40,000 for the month:

7% royalty = $2,800
1% local advertising = $400
3% national advertising = $1,200
20% labor = $8,000
29% food = $11,600
3% paper = $1,200.
3% accounting / payroll = $ 300
10% rent / CAM = $4,0002.
75% insurance / misc. = 1,100
5% repay SBA loan = 2,0004.
5% misc. bills (utilities, etc) = $1,800.
5% spoilage = $200
1% supplies = $400
1% promo food = $400
1% comp food = $400
2.9% credit card fee = $1,160.
4% coupons = $160.
5 food waste = $200

IF a store earns $480,000 annually, the franchise owner can expect to walk away with a profit of 9.4%. That equals approximately $45,120. If you live in an area with cheaper rent, there will be a higher profit margin.

These figures are real. These figures are why I NEVER advise a sandwich shop as an investment. I ask my clients if they want to make $45,000 a year after investing all that money, and doing all that work. Some secretaries make more than that. You invest all that money, do all that work, and you make less than a secretary? There are MANY other franchises that cost MUCH less and make a MUCH larger R.I.O. (Return on your Investment)

If you would like more information about better returns on your investments there are two great websites: www.masterfranchisingandareadeveloperopportunity.com
or www.franmartconnection.com

I have experienced success in the franchise business as the owner of multiple types of franchise units. I have extensive knowledge of starting, growing, operating, and selling franchises. Like Fran Mart Connection, I believe strongly that a business should facilitate the dreams of its owner.

In 1983 I completed my MBA in small business management and entrepreneurial studies, then purchased her first franchise. I won numerous awards for quality management, and became a key “go to” business owner upon whom the Franchisor depended on to train new franchise owners.

In 1998, I successfully sold all of my franchises. Today I continue to consult in business development and work force training. I am excited about my relationship with Fran Mart Connection as an independent consultant, as it affords me the opportunity to use my knowledge first hand about franchising and business ownership. I have become is an expert in advising and coaching others in decision matrix development, and execution.