(Newswire.net — May 22, 2014) Melbourne, Victoria — So essentially the idea is to take another organization’s trade name, business model, products and services and reproduce it in different locations.
Traditional franchise costs will vary depending on the franchise but a franchise will cost you between $20,000 to $50,000 for a services franchise like cleaning, dog washing and gardening, whereas a food services franchise will start at $50,000 for something like a Subway heading up to a million plus for a McDonald’s restaurant.
Other costs to take into account are legal fees, build out costs, inventory, supplies and working capital.
The franchise owner would normally pay a monthly franchise fee back to the franchisor which could be a set fee or could be based on a percentage of the franchises monthly turnover.
Allegedly, history would have us believe that 9 out of 10 businesses will fail in the first year, however with a franchise model this figure can drop to 2 out of 10 failure rate and the point being trotted out is because a franchise model has systems and support that greatly increase the chances for success.
The transition from offline physical franchises to online digital franchises has now started where some of the fundamentals remain the same. For example the cost and investment structures remain consistent with traditional physical offline start-ups which is around the $25K mark, remember the old saying, if it seems too good to be true it probably is or you get what you pay for.
The traditional physical franchise system comes with a supposed guaranteed system that delivers income anywhere from 50K to 1 million per annum but can take several years before it turns a profit whereas compared with online digital products version where the profit margins are extremely high but the learning curve is greatly underestimated and the expectation of early profit is grossly overstated.
In some respects the online model looks very alluring but like anything, the devil is the detail. For a person who has no knowledge or experience of business and no technical knowledge the online franchise model can be a steep learning curve, but given time can deliver not only high income but also multiple income streams and also passive income streams, which is becoming increasingly important in the modern world.
The illusion online is that the successful testimonials which are sometimes provided are generally of people who have been in the game for several years and have a strong and existing subscriber base to market too.
Robert Kiyosaki refers to the book Outliers : The Story Of Success by Malcolm Gladwell in his book The Business Of The 21st Century. Gladwell says ” to become outstandingly accomplished at anything takes 10,000 hours of hard work”, he says as a high school kid Bill Gates put in 10,000 hours of programming.
To justify 10,000 hours to become outstandingly accomplished at developing an online franchise should be money freedom, time freedom and location freedom, which is something that cannot be said for traditional self employment business enterprises.
Sources
http://franchises.about.com/od/franchisebasics/tp/how-much-does-a-franchise-cost.htm
http://www.franchising.com/howtofranchiseguide/the_cost_of_opening_a_franchise.html
http://en.wikipedia.org/wiki/Franchising
http://www.washingtonpost.com/blogs/fact-checker/wp/2014/01/27/do-9-out-of-10-new-businesses-fail-as-rand-paul-claims/
http://en.wikipedia.org/wiki/Robert_Kiyosaki
http://gladwell.com/outliers/
http://www.low-cost-franchises.com
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