Be Wary Of Franchise Income Guarantees, Expert Says

StartupSmart:

Prospective franchisees should not enter a franchise solely because it offers a guaranteed income system, an expert says, as more franchisors use income guarantees as a recruitment incentive.

According to Jason Gehrke, director of the Franchise Advisory Centre, income guarantees are particularly common among service franchises, which tend to attract first-time business owners.

“There is the uncertainty [among first-time business owners] of going from a fixed, regular income to the irregular income of being self-employed,” Gehrke says.

“Income guarantees among service franchisees are often structured along the lines of ‘$2,000 a week guaranteed for the first eight weeks’ to ease the transition from employed to self-employed.” Full article.