Anyone have a Franchise?

Cleveland, OH · Member since 2017 · 69 posts · 12 votes

I know BP is mostly for RE, but does anyone here also invest in any franchises? Seems like it could be as profitable if not more as a Re investment. Also, could be a good way to diversify your investments and not put all of your eggs into one basket to say.

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

@Ben Patel

Old thread is right, but why not? I can only give you my experience. Between 1986 and 2000 I stated and built a small chain of 8 franchised locations in the automotive repair industry. I rented the property in5 of the locations and owned the real estate in three. I decided to do an analysis of where my profits came from, and where my time was spent. Over 75% of profits accrued from owning the real estate, yet the real estate accounted for less then 5% of my time. So in 2000 I sold all the businesses, and went into real property investment as a full time career. Since I have increased my net worth by 700%.

One takeaway is that for me personally, real estate investing is a much better fit than managing a small business. Interestingly, some of the tenants in properties I own or own a piece of are fast food operators. Seems like they are always struggling with high operating costs, high employee turnover, huge time commitments, large monthly payments on bank loans, and high lease payments, as well as increased competition keeping prices low. And if they are successful in raising revenues, our leases call for us to get a small percentage of the increased revenue. I work less, earn more, build more significant long term wealth, and enjoy what I do more investing in real property that operating small businesses. But that’s just my personal experience. Would love to hear from anyone else that tried both.

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Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
8y
The more I learn, the more I realize there are so many great ways to generate income and build wealth. I've ran the numbers on a few franchises, and I agree that you can get a great return. I suppose it just comes down to the pros and cons you are more comfortable with. I'm following this to see how others respond, very interested.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Ryan Ingram For sure! I also think it would create a new adventure for people who have been doing Re for a long time and are looking for something new. This could also apply to RE investors who invest in other businesses to like startups, companies expanding etc.
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Fred Shank
Investor · Seattle, WA · Member since 2016 · 15 posts · 8 votes
8y
I’ve been thinking about a franchise for a while. Following to see where this convo goes.
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Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
8y
My interest started in stocks. After analyzing and investing in stocks based off fundamentals for quite some time, I then learned of dividend stock investing. From there, I familiarized myself with investing for cash flow. Naturally, that has led me here to REI.
I am currently analyzing a few different franchises here in Ohio with an investor pal. You're definitely spot on with the usage of the word adventure. Definitely getting me out of my comfort zone.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Fred Shank Yeah they are all over just like RE!
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Ryan Ingram Nice. Stocks are good.
Anything with risk can come with a big reward. The question is, how do you get that big reward?
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Jeffrey Hotz
Real Estate Professional · Dublin, OH · Member since 2013 · 251 posts · 165 votes
8y
I’m a franchise of HomeVestors of America, Inc the “We Buy Ugly Houses “ guys. Obviously that is RE Investment based, but many other HomeVestors franchisees diversify their business with other opportunities like Great Clips, Liberty Tax Prep, etc.
I’ve actually been on the look To add something in lately, so this topic was appropriate. Wife says stay away from food service, thoughts?
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Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
8y
I agree with your wife @Jeffrey Hotz, not from experience but at the thought of inventory spoiling or rotting prior to fulfilling its mission to return my capital :)
How long have you been with HomeVestors? And I'm happy to see this has a good OH presence.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
This is the Ohio investors page! Ha! Could you tell us alittle more about how the HomeVestors of America franchise works, what you get from it and what they provide to you?
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Jeffrey Hotz
Real Estate Professional · Dublin, OH · Member since 2013 · 251 posts · 165 votes
8y
@Ryan Ingram yea and general health regulation. I’ve been with HomeVestors 5 years now, you going to OREIA Convention this weekend?
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Jeffrey Hotz I see your wife's point about the food franchise but then I look at a franchise like MCD and I wonder if most of them have a good return?
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Jeffrey Hotz
Real Estate Professional · Dublin, OH · Member since 2013 · 251 posts · 165 votes
8y
@Mike Bereck Hey Mike, started HomeVestors in CLE, was the first franchise back after the crash. We’re 15 Strong now in CLE! I’ll PM you as there’s a few event stuff coming up, Our Deal Maker Session (off market properties presented) on Nov 15th and a Discover Day (Learn how to Buy From is or Buy Like is) on the 17th in Cleveland.
We’re also having Discovery Day event every night at the OREIA this weekend, Monday In Cincinnati and Tuesday’s in Columbus.
Discoverydaycolumbus.com
Only have a site for CBUS, which is where I am now.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Jeffrey Hotz Very cool! I will look forward to your pm!
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Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
8y
Originally posted by @Jeffrey Hotz:

I’m a franchise of HomeVestors of America, Inc the “We Buy Ugly Houses “ guys. Obviously that is RE Investment based, but many other HomeVestors franchisees diversify their business with other opportunities like Great Clips, Liberty Tax Prep, etc.
I’ve actually been on the look To add something in lately, so this topic was appropriate. Wife says stay away from food service, thoughts?
I have seen both good and bad outcomes with food service industry franchise. Some of the low entry price, low net worth franchises will gouge you on food prices, required equipment purchases, marketing spend, etc. When they run national giveaways and the owner is struggling to make ends meet.
On the positive side, super strong franchisees like McDs or Chik Fil A are a veritable gold mine if you can pass the application test.
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Account Closed
Earth · Member since 2017 · 297 posts · 187 votes
8y
I googled McD before and found these numbers: $2 million investment Return: $100k yearly NOI , which is about 5% return. It the numbers I got online are correct, I don’t want to do it.
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Jessica Laurier
Vendor · East Brunswick, NJ · Member since 2017 · 4 posts · 1 vote
8y
Hi there! My husband and I purchased a carpet cleaning franchise, Oxi Fresh, last year. We are growing with lots of networking and good old fashioned hard work. We are very happy with our decision to go into business for ourselves. Good luck with whatever you decide! - Jessica, Oxi Fresh of Central NJ
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Ryan Tyree
Morgantown, WV · Member since 2017 · 22 posts · 19 votes
8y
I've looked at 4 different food service franchises. All of them had a 40 hour requirement for the owner to work on the business. This didn't necessarily mean in store, but rather reconciling the books, marketing, etc. They all had a 3-4 week training period you had to attend as well. From talking to owners of these 4 franchises I found that they were netting somewhere around 60k - 75k per year after all expenses, franchise fees, payroll, and taxes. This was pretty standard regardless of the name on the building. The only way to make real money is to own multiple locations, all bringing a similar return. At the end of the day I didn't feel it was the right investment for me in my situation.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
Seems like it isn't worth the amount of money you have to put up to start and then the return. RE gives better return unless you have a lot of the same buildings that all make about the same each year.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Jessica Laurier How is that franchise going for you in terms of the rate of your investment?
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Ronald Rohde Yeah. It seems like the big companies you can do well but I know they are hard to get into.
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Lucius Carroll
Real Estate Broker · Nashville, TN · Member since 2013 · 54 posts · 29 votes
8y
I spent a combined 20 years in food services - as an investor, I would not touch a food related franchise. Primarily because of the number of employees & inventory required. A service business is another story - no/minimal inventory, can be "regular" hours - build a book of business that feeds itself via referrals. Pest control, alarm, and various inspections come to mind. As with all investments, due diligence is critical. "Don't believe the hype" and make a business decision based on your skill set, interests, and goals.
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Mike Bereck
OP
Cleveland, OH · Member since 2017 · 69 posts · 12 votes
8y
@Lucius Carroll Good point. I saw that you said you invested in food related franchises so would you or are you still investing in them but not owning them?
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Ed LeGrand
Investment Property Specialist · Santa Clara, CA · Member since 2015 · 90 posts · 16 votes
8y
Originally posted by @Lucius Carroll:
I spent a combined 20 years in food services - as an investor, I would not touch a food related franchise. Primarily because of the number of employees & inventory required.
A service business is another story - no/minimal inventory, can be "regular" hours - build a book of business that feeds itself via referrals. Pest control, alarm, and various inspections come to mind.
As with all investments, due diligence is critical. "Don't believe the hype" and make a business decision based on your skill set, interests, and goals.
I have worked with food service franchises on the brokerage side. I have heard that operating a new location for the first couple of years is grueling.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
8y
Mike Bereck my cousins both have owned franchises and done pretty well. They started a chain of little Caesars restaurants and sold those. They both moved on to the budget blinds franchises in different parts of the country after that. I can put you in touch with them if you’d like.
[email protected]512-888-9122
The Moorhead Team5140 Reviews
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Sujan Basnet
Savannah, GA · Member since 2017 · 23 posts · 10 votes
8y
I have been in a Travel Franchise business and My dad been in a Restaurant Franchisee business. I hardly get to see him just because of the amount of time he needs to spend in the business. Even with the full employees, it's hard to profit from business unless you are there running it yourself.
but as a travel franchise, I don't need to worry about hiring people, inventory, or loopholes of loosing money.
BTW this is a great time to book a cruise. :)
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