Most product-oriented franchise businesses sell some sort of food, so operating them is like running a small factory. Your up-front investment in the franchise business, and especially in local real estate for the store, will almost always run into the low 6 figures. The many day-to-day issues include maintaining proper inventories, ensuring quality, keeping up the grounds, and hiring and managing lower-skilled employees.
Typically, you don’t have to worry about pricing, because headquarters sets that. And most of the marketing is done for the franchisee through national, regional and local programs sponsored and run by the franchisor. The franchisee’s role is largely to keep his doors open and allow the franchisor to drive customers in.
Product franchise businesses can be more exciting than service franchises, because you’re partaking in – and often helping to create – a trend du jour. That means you can make a lot of money in a hurry.
On the other hand, the market can run dry pretty quickly. ‘A lot of product businesses are fad-based,’ says Steve Rosen, chief executive officer of FranNet, a San Diego-based franchise-brokering service. ‘It goes in cycles. People love coffee or ice cream or high-fat or low-fat stuff; they love or hate donuts. You’ve got to take that into account.’
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