How To Get Big Bucks With A Franchise

Newsday.com:

Imagine opening 10 new business locations without having to foot the bill for real estate and development costs or taking on any of the risk.

Even more, imagine finding managers to run those locations, who are just as committed to growing the company as you. Sound far-fetched?

Not if we’re talking about franchising, one of the fastest ways to grow a small business without breaking the bank, experts say.

‘It’s a way for companies to expand and grow, using other people’s capital and human resources,’ says Harold Kestenbaum, a franchise attorney who is counsel to Farrell Fritz in Uniondale.

That’s because it’s the franchisees, not the franchisor, that have to pay the expense of securing a location, renovating it, equipping it, stocking and staffing it, Kestenbaum explains. In essence, they become stakeholders, who now have a vested interest in making the business work.

As the franchisor, you are responsible for providing the necessary training to get them started, as well as any follow-up they may need and companywide marketing support, use of name, logo etc. Most of these start-up costs would be covered by an initial franchise fee that you would collect from the franchisee, Kestenbaum says. You would also be paid a weekly or monthly royalty fee, which typically ranges between 4% and 6% of a franchisee’s gross sales, he notes.

Sound like a sweet deal? Read on…