Is franchising a risky business? Is it a risky investment?

Question

What are the schooling requirements?

Are loans a problem?

I'm only in my final year in high school and I am considering this as a career. I was thinking of a franchise such as Subway or any other fast food joint, even though you need to invest a lot of money.

I would like to receive an answer from somebody who knows what they are talking about and not some dumba** that just says "I don't know," or "google it."

Answer 1

Your first lesson in business is to not call others names. You'll need a lot of others to help you become successful in a franchised business, and griping while seeking information from them will lead to failure.

Franchises train their owner/operators in most instances, charge a fee front end plus ongoing royalties from the owner.

Loans are part of the business. Rarely is someone going to buy a business for cash.  It happens, but it's not a fit for most, even if they have the money, because it reduces their control over their net assets, and that's usually a losing proposition for an owner/entrepreneur.

Subway is a good business, but is rarely going to provide the type of income that allows an owner more than a moderately paying "job".  The question any franchisee needs to ask are:

1.  What's the recovery time for my investment?

2.  Who are the competition - nationally and locally?  

3.  What is the cash flow above costs/investment total?

4.  What percentage of my personal time am I willing to devote to the business to make it successful?

5.  Which owner/operators already on board are available for me to speak with?  When?

6.  What is the anticipated gross sales, bottom line after all expenses and taxes?  

7.  How many of these operations have failed?

That should get you started.  If you're really serious about this, there are a wealth of places on the net to get information. Digging for information is what makes people successful.  Have at it

Answer 2

In addition to the franchise fee you usually need to have documented net worth, 250k to 999k is the norm.

They are less risky them starting a business on your own, you get business from name recognition.   Many people like the structure of franchises.

How well it works out for you will depend on your business skills.