Joel Libava's Blog: The Franchise King Blog, page 89

The Answer: 39,312,039 Big Macs | The Question….

 

How many McDonald's Big Macs would you have to sell in order to break even on your investment in a McDonald's franchise?

And…why should it matter?

 

 

It matters because once in awhile, people looking at franchises need to be humbled. It's good for the soul. (Supposedly)

If I could get paid $100 for every time someone, (after finding out that I was in franchising) asked me how much a McDonald's franchise would cost to buy, I'd have enough money stashed to at least send in the down payment required for one restaurant.  Seriously.

Investing in a McDonald's franchise isn't for the meek. Actually, it's not for most people. Either are Ferrari's.

If you happen to be the proud owner of one or two McDonald's restaurants, I'd wager that you're in the 1% club. (Or pretty darn close.) And, I salute you. I'm serious; it took an awful lot of courage to write a check for at least $300,000, a certain degree of intelligence to get help crafting a superb Franchise Business Plan, and some solid business skills to obtain a small business loan. Of course you would have to have some pretty powerful skill sets in order to negotiate a commercial lease with the best lease negotiators our world has ever known.

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So, as an owner, you'd need to sell 39,312,039 Big Macs to get your $1.5 million investment back.

(Please check my math; it's based on the average cost of a Big Mac in the USA-$4.07)

 

And, how do I know that the average cost for a certain McDonald's double cheeseburger concoction is $4.07?

Because I looked very closely at the Big Mac Index Infographic below…..

 

 

So, what did you learn?

 

Want more? Just follow me on Twitter @FranchiseKing

 

A New Door Added To The Obama Cabinet

 

No…no! Not that type of cabinet.

 

This type of cabinet!

 

 

From CNBC;

Today, President Obama made the announcement that the SBA would become a cabinet-level agency in front of small-business owners at the White House. The head of the SBA was a cabinet-level position under the Clinton Administration. The announcement was part of a larger proposal that would combine the SBA with five other government agencies that focus on business and trade, according to the AP.

 

This could be just what those of us in the small business community need. Someone to take us seriously.

 

What do you think?

 

(Disclosure; I'm the exclusive guest blogger on franchising for SBA.gov.)

 

 

5 Lessons From Former Quiznos Franchisees

 

If you're just starting your search for that perfect franchise business opportunity, you may not be aware of some of the issues that Quiznos, (a submarine sandwich franchise chain) has been facing. I'm here to school you on some of them. That way, you can learn from their mistakes, and quite frankly, lots of mistakes that the franchisees made before they wrote their checks.

 

 

Quiznos has had, "issues" for a long time. Franchise industry insiders have been aware of them for years. Here are some of the major reasons that Quiznos is in trouble, according to my friend, Carol Tice, who wrote a post for the CBS News website;

"Number one, franchisees are compelled to buy everything from sliced turkey to toilet paper from Quiznos at above-market rates. Second, Quiznos store owners continue to complain that the company opens stores too close together, cannibalizing sales at existing locations and driving down their profits." Read the rest at CBS News

There's another reason; false expectations from franchisees.

It's unrealistic to think that you can plunk down$150,000, open one food franchise, and become rich. (There are some exceptions. Look for the Golden Arches.) I'm not suggesting that every Quiznos franchise owner thought that, but I'd wager that lots of them did. It's that, "American Dream" thing.

I've written about the problems that Quiznos franchisees have been facing for years. Things have gotten so bad, Quiznos may actually go out of business.

 

I Feel Bad For Them

 

The people that have been affected the most by consistent ball-dropping by the Quiznos executive team are the ones who are suffering. Franchisees that are now, "former franchisees," have lost a lot of money. Some have probably lost their homes. That's not what's supposed to happen when you become a franchise owner, trust me.

If you're starting to get serious about being your own boss, there are at least 5 things that you can learn from former franchisees of Quiznos.

They are;

 

1. Don't buy a specific franchise just because it's been named a "top franchise"

 

2. Don't buy a franchise without talking to current and past franchisees of the franchise you're interested in

 

3. Do hire a franchise attorney

 

4. Make sure that you have enough fall-back money

 

5. Go to The Street.com to find out what #5 is

 

Finally, work with a franchise industry insider to help you figure things out.

 

 

 

When Does The Money Start Rolling In?

 

That question probably comes in at number #2 or number#3 on your Top 10 list of things that you really want to know when you're looking at franchises. And, rightly so.

 

Now, I have a question for you;

 

Which way would you like me to answer the money question up above? 

 

 A. Like someone who's trying really hard to sell you a franchise would?

 

Or

 

B. Like you've come to expect from me?

 

I'll wait for your answer. Tapping. Tapping.. (I'm tapping my pencil…in anticipation of your answer.)

 

Really? You want the truth? You don't want me to spin my answer?

 

Terrific. Here goes;

 

When you actually do open your franchise up, you'll certainly have money coming in. But, it can't go into your pocket right away. It needs to go back into the business. You'll have expenses to cover…things like rent, inventory, payroll, advertising, and utilities. And don't forget your loan payment.

Your goal needs to be breaking even. That's the point in which your revenue pays your business expenses. Only then can you start thinking about drawing a salary.

 

If you're in this for the long haul, (this being franchise business ownership) you should be fine with that answer.

 

If you're looking to replace a salary after only a few months in business…it probably won't happen.

 

Read what I wrote about Your Salary as a Franchise Owner over at SBA.gov

 

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10 New Year's Resolutions From Business Book Authors

 

Sometimes, small business owners need inspiration. Successful ones are great listeners. They're also people who are smart enough to implement some of the things they see, hear, and read-things that they know they should do to grow their businesses.

 

As The New Year approaches, slate-cleaning will be one of things taking place in almost every small business across America. The folks at BusinessNewsDaily.com approached me to deliver one New Year's resolution that I feel all small business owners need to write on their thoroughly cleaned slates.

 

Here it is;

"Get with someone on how to do correct social media marketing. Don't just set up a Facebook Page, a Twitter Account and a Google+ Business Page and hope things turn out well."

 

And here are 9 more from some of the country's best business writers….

 

Are You Following Me on Twitter? I'm @FranchiseKing  

 

 

 

 

Do You Know About Amazon.com Author Pages?

 

If you're an author, you can create your own free page on Amazon.com. I did.

 

(Click the screen shot)

 

 

As you can see, I was able to add;

 

My biography

 

A link to my book (in all formats)

 

A customer discussion area

 

A link to my main franchise blog

 

My latest Twitter discussions  Follow me @FranchiseKing  

 

I've found that some authors aren't aware of this free feature from Amazon.com.

 

Another great thing about the Amazon.com is the fact that readers of my book can easily post reviews. (Easily)

 

Hint. Hint.

  

There are some book reviews up already. But, I hear that they're getting kind of lonely.

 

Thank you in advance for your support.

 

 

 

 

Amazon Video Book Reviews Rock!

 

Denise O' 'Berry, a small business expert, author, and friend, just spent the last week producing a video describing the contents of my new book on franchising. I met Denise, (but not in-person yet) through my association with Small Business Trends, where I'm the "Franchise Expert in Residence."

 

Denise specializes in small business strategy, and is one smart lady.

 

I put Denise on my list of people that I wanted my publisher to send review copies out to, and she obviously put my book on top of the others that she receives, because she read it in record time. She did something else to; she took the time to shoot the video below. And she took the time needed to submit it to the folks at Amazon.com for approval. (I guess it's not easy to get a video review of a new book approved.)

 

I'm grateful to Denise for doing this, and Amazon.com for adding it to the page they put together highlighting my book.

 

 

Have you read my book yet? Have you seen the reviews that are just starting to come in?

 

Look!

 

 

By: Prices and Service at Fast Food Restaurants

[...] I didn’t believe him at all. I’m not sure if Joe knows that he’s in my new franchising book, but he is. That’s because he was a great teacher. And we fought constantly. Heck, I [...]

Franchise Risk Isn't Always One-Sided

 

When most people think of risk, they only think about their risk.  That's completely normal.

 

When someone contacts me about my franchise advisory services, I can usually sense some apprehension on their part.

 

A. They really don't know who I am.

B. They're nervous about business ownership

 

As they should be.

 

Becoming the owner of a business–any type of business is risky. But don't worry.

I can fix that.

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Do you think that it's risky to turn a business into a franchise business? It's real risky. One reason that it's risky to franchise a business is that there's no guarantee of success. (Kind of like when you become a franchisee.) Another reason has to do with the person or the firm that's actually doing the necessary work needed to put an entire franchise package together. They're not all good. Read about pond scum franchise development firms.

 

There several things that need to be done before one can "franchise" a business.

 

In addition to the financial investment needed to do it right (well over $100,000), there's an operations manual to write (and perfect), the right technology (software and computer systems) to be purchased and customized, the legal requirements-state by state, plus the new concept has to be marketed.

 

I'd like you to read this post I did a while back about The Other Side of Risk in Franchising

 

When you buy my book, you'll read even more about risk…all types of risk, and ways for you to lower it that have been proven time and time again to work.

 

By: The Franchise King

We have a winner. Mike-send me your mailing address and email address! Congrats! thefranchiseking at sbcglobal dot net