Howdy Ags,

Just wanted to get the board's thoughts on purchasing a franchise.

Does anyone own, or has owned a franchise?
What are the do's and don'ts?
Is it worth it?

My brothers and I are thinking about putting some money together and purchasing a food franchise. We haven't agreed to anything yet. Right now we're simply obtaining as much info as possible to see if this is a reasonable venture to take on.

Any info will be awesome, thanks!

Food is a lot of work. Profits are slim, because franchise fee is right off the top. Money comes in multiple locations and at sale of franchise. Employees are a big problem in the food business. Hire 100 to get a crew of 20. Just my .02.. Good luck!

I hear a lot of franchise offerings on Fox News radio. I doubt many are "legit" or profitable.

If not food, what's the best franchise route?

chloelee said:

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Food is a lot of work. Profits are slim, because franchise fee is right off the top. Money comes in multiple locations and at sale of franchise. Employees are a big problem in the food business. Hire 100 to get a crew of 20. Just my .02.. Good luck!

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This x 1,000. If there are several of you pooling money, I suppose you are looking at one of the high end franchises, and some of those require a million to two million dollars in start up capital.

And which of you will run the thing? Or are all of you planning to do so? Have any of you run a food business? The other thing about the food business is being open so many hours per day and almost every day of the year.

It wouldn't be for me. But to answer your question, I have had only one franchise as a client. It didn't pan out and it had more to do with the owner than to anything else. I have had a couple of pretty successful food businesses that were not franchises and they have made it because so many of the employees are family.

As mentioned, the employee issue will be your biggest headache.

I hope it works out for you and your brothers if you take the plunge.

Make sure to invest in kiosks right off the bat if you go that route. Low end employees will instantly make you regret getting into the game otherwise.

This isn't franchising, but you could end up having a kiosk in several malls... my son works in a kiosk (the guy also has a store right across the way) selling phone cases, chargers, phones and fixing glass and phones. On a bad day they do $2,500 out of the kiosk. The cases are purchased from China for about $2 and resold for $40/$50. There are days when the kiosk and store combine to make $7,000, and this is a dud of a mall. He has another kiosk in a big mall and who knows how much jack he's making there.

CS78 said:

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Always thought they seemed like a good idea until you look at how much work and capital they take. Just seems like a lot of money to be buying yourself a hard job. For the amount of cash, you'd be better to own the property and rent it out for less risk and a whole lot less work.

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Excellent points.

Open up an RV/Boat storage lot. There are some open air ones around me, and they seem to make a killing with little over head (land cost, maybe a small structure, lighting, security), 1-2 employees. No cost of goods.

The one near me looks to have ~300 spots, average of $75 a month, that's $250k a year. It's totally full. If he got land a while back, it was probably pretty cheap. Once land is paid off, the profit skyrockets.

Drew_Hill said:

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You are saying a kiosk in a dud of a mall sells about 60 phone cases per day on a bad day? I find that very hard to believe.

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phone cases, phones, chargers and phone accessories. I ask my son every single night how much the kiosk did and it's nearly the same every time. let's look at it like this... that's an average of 5 transactions an hour if you go by $40/$50 per unit. If they sell a phone for $300 then the math changes. Might be hard to believe, but he's worked there during high school and we talk about sales and the money that place makes all the time.

62strat said:

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Open up an RV/Boat storage lot. There are some open air ones around me, and they seem to make a killing with little over head (land cost, maybe a small structure, lighting, security), 1-2 employees. No cost of goods.

The one near me looks to have ~300 spots, average of $75 a month, that's $250k a year. It's totally full. If he got land a while back, it was probably pretty cheap. Once land is paid off, the profit skyrockets.

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I've been thinking about this idea. My family has some land in east texas that is just sitting there and been trying to figure out way to cash flow from it.

jaggiemaggie said:

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62strat said:

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Open up an RV/Boat storage lot. There are some open air ones around me, and they seem to make a killing with little over head (land cost, maybe a small structure, lighting, security), 1-2 employees. No cost of goods.

The one near me looks to have ~300 spots, average of $75 a month, that's $250k a year. It's totally full. If he got land a while back, it was probably pretty cheap. Once land is paid off, the profit skyrockets.

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I've been thinking about this idea. My family has some land in east texas that is just sitting there and been trying to figure out way to cash flow from it.

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He makes very good points. Few moving parts, few employees, not much to need to repair. We have a small RV park and are looking for property now to build mini storage on. Wish I had done all this 20 years ago!

I think your son might be trolling you so you dont make him get a real job where he isnt sitting there playing games on his phone all day at the kiosk.

Also seriously doubt they are making $40 to $50 every time they sell a phone charger or case.

libertyag: would you mind emailing me at jaggiemaggie at gmail ? I'd like to inquire more about the subject

Will do.

Look into camp bow wow franchises

libertyag said:

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jaggiemaggie said:

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62strat said:

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Open up an RV/Boat storage lot. There are some open air ones around me, and they seem to make a killing with little over head (land cost, maybe a small structure, lighting, security), 1-2 employees. No cost of goods.

The one near me looks to have ~300 spots, average of $75 a month, that's $250k a year. It's totally full. If he got land a while back, it was probably pretty cheap. Once land is paid off, the profit skyrockets.

---

I've been thinking about this idea. My family has some land in east texas that is just sitting there and been trying to figure out way to cash flow from it.

---

He makes very good points. Few moving parts, few employees, not much to need to repair. We have a small RV park and are looking for property now to build mini storage on. Wish I had done all this 20 years ago!

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And the biggest advantage over anything else - you don't have to be there 40 hours a week (or in the case of a restaurant 60-80 hours a week). Gates, security codes, etc. Users come and go as they please.. all they are doing is picking up their boat/rv or dropping it off. You really don't hardly have to be there at all.

The one near me just has a phone number on front of gate; potential new customers just call, and the guy will meet you there. He literally doesn't even have an employee. Current customers use their gate codes. He has two lots on south side of denver.

Very dirty math:

Say 30 acres of land at $15k/acre + $100k for improvements/fencing/security/etc = $550k; 10 years 5% is $5800/mo. Prop taxes (in my state) are another $1k/mo. Lighting, security, utilities (gotta have a dump station), say $1000. All in $8k.

400 slots, at $75 average is $30k/mo or ~$16k after taxes... This guy's is about 1500x500 (~17 acres) and looks to be about 400 slots based on my counting on google earth.

Unless I'm just blatantly missing something, there's doesn't seem to be much else on the cost side. Insurance? Construction trailer for an actual office? Have a few part time high school/college kids to man it.

After 10 years, your profit goes up to $14k/mo. And you work maybe 10 hours a week? At that point pay a full time employee so you don't have to work.

I really want to do this in about 10 years.

But it seems too easy. Just got to find the right balance of not too expensive land, but good location for rvers/boaters.


Edit to add;
forgot about any earthwork/improving land. I'm pretty sure the one I see is just compacted rock/gravel. But asphalt or concrete could be a substantial cost.

Nothing about that scenario makes any sense. I've seen the "2 dollar" cases coming from alibaba and seriously doubt people are lining up to pay $40 for them. I think Walter White may be the silent partner for this operation.

There's a kiosk for cell phone crap at the galleria food court, which has to be one of the the most active malls around, and the guy nearly has to tackle people to get them to pay any attention.

62strat said:

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And the biggest advantage over anything else - you don't have to be there 40 hours a week (or in the case of a restaurant 60-80 hours a week). Gates, security codes, etc. Users come and go as they please.. all they are doing is picking up their boat/rv or dropping it off. You really don't hardly have to be there at all.

The one near me just has a phone number on front of gate; potential new customers just call, and the guy will meet you there. He literally doesn't even have an employee. Current customers use their gate codes. He has two lots on south side of denver.

Very dirty math:

Say 30 acres of land at $15k/acre + $100k for improvements/fencing/security/etc = $550k; 10 years 5% is $5800/mo. Prop taxes (in my state) are another $1k/mo. Lighting, security, utilities (gotta have a dump station), say $1000. All in $8k.

400 slots, at $75 average is $30k/mo or ~$16k after taxes... This guy's is about 1500x500 (~17 acres) and looks to be about 400 slots based on my counting on google earth.

Unless I'm just blatantly missing something, there's doesn't seem to be much else on the cost side. Insurance? Construction trailer for an actual office? Have a few part time high school/college kids to man it.

After 10 years, your profit goes up to $14k/mo. And you work maybe 10 hours a week? At that point pay a full time employee so you don't have to work.

I really want to do this in about 10 years.

But it seems too easy. Just got to find the right balance of not too expensive land, but good location for rvers/boaters.


Edit to add;
forgot about any earthwork/improving land. I'm pretty sure the one I see is just compacted rock/gravel. But asphalt or concrete could be a substantial cost.

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Again, you make some good points. You are correct about not having to have a presence at the facility hardly at all. I know someone who has mini-storage who is almost never there. He has another full time job. Place has security fencing and a sliding gate, if someone wants to rent a space he gives them the gate code over the phone and processes the credit card payment via phone and has a drop box for them to leave the signed rental agreement.

I realize everyone sees things differently but I would never get involved in any business that had a lot of employees, inventory, or things for others to destroy. I suppose if I was running the only legal brothel in a town with a large military base, none of that would matter, but anything short of that those things can really do a number on your numbers.

While I agree with most of your analysis, I don't think many facilities of any size will achieve 100% occupancy. But even at a lesser occupancy rate, the numbers will likely look pretty good. You have to avoid overbuilding in the first place. If the market won't support but 100 units and you build 300, it's going to be a mess. I would build some number of units then build more as the first group is fully occupied and repeat until I couldn't rent them all.

Your final edit is on point. Depending on where you build, that cost can be enormous. The requirements many cities and counties have now can kill the deal. I looked at developing a tract and the costs of the roads alone (due to county requirements) was almost as much as the total purchase price of an already built and operating business. Many areas require all concrete, chip seal, or asphalt. I had an engineer out doing a windstorm inspection and he told me of someone he knew who had been waiting over a year to build a building because of a drainage issue. There is a site across from some of our property on which there will be built one of those large stores/gas station things with 12 or 16 pumps. They bought the land, cleared it, did a little site work and then nothing for a year and a half. I have been told they are in some sort of dispute with TXDOT (or some group).

Quote:

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Unless I'm just blatantly missing something, there's doesn't seem to be much else on the cost side. Insurance?

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I would think that would be a major cost. I won't pretend to understand the rental agreements with those things, but I would think the 2 reasons someone pays your rent is because 1) you aren't their driveway and 2) you're responsible for it while it's there.

NVM not really appropriate for this board

libertyag said:

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62strat said:

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And the biggest advantage over anything else - you don't have to be there 40 hours a week (or in the case of a restaurant 60-80 hours a week). Gates, security codes, etc. Users come and go as they please.. all they are doing is picking up their boat/rv or dropping it off. You really don't hardly have to be there at all.

The one near me just has a phone number on front of gate; potential new customers just call, and the guy will meet you there. He literally doesn't even have an employee. Current customers use their gate codes. He has two lots on south side of denver.

Very dirty math:

Say 30 acres of land at $15k/acre + $100k for improvements/fencing/security/etc = $550k; 10 years 5% is $5800/mo. Prop taxes (in my state) are another $1k/mo. Lighting, security, utilities (gotta have a dump station), say $1000. All in $8k.

400 slots, at $75 average is $30k/mo or ~$16k after taxes... This guy's is about 1500x500 (~17 acres) and looks to be about 400 slots based on my counting on google earth.

Unless I'm just blatantly missing something, there's doesn't seem to be much else on the cost side. Insurance? Construction trailer for an actual office? Have a few part time high school/college kids to man it.

After 10 years, your profit goes up to $14k/mo. And you work maybe 10 hours a week? At that point pay a full time employee so you don't have to work.

I really want to do this in about 10 years.

But it seems too easy. Just got to find the right balance of not too expensive land, but good location for rvers/boaters.


Edit to add;
forgot about any earthwork/improving land. I'm pretty sure the one I see is just compacted rock/gravel. But asphalt or concrete could be a substantial cost.

---

While I agree with most of your analysis, I don't think many facilities of any size will achieve 100% occupancy. But even at a lesser occupancy rate, the numbers will likely look pretty good. You have to avoid overbuilding in the first place. If the market won't support but 100 units and you build 300, it's going to be a mess. I would build some number of units then build more as the first group is fully occupied and repeat until I couldn't rent them all.

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Maybe you didn't see my earlier posts: The rental lot I'm referring to is open air. There are no structures.

https://www.google.com/maps/place/Parker,+CO/@39.5034683,-104.7836062,1198m/data=!3m1!1e3!4m5!3m4!1s0x876c91ce239a3d55:0xd49aeed43d2e2426!8m2!3d39.5186002!4d-104.7613633


Guy is right in the middle of town too, but it's unincorporated county, so a great spot. Literally right next to neighborhoods.

I agree, maybe buying an oversized lot and developing/renting half of it for a while until occupancy is up is probably a good idea (so it's not too empty looking), then develop and rent more as that time comes. But you'd still either have to buy all the land at once. Having covered storage is an entirely different business model and obviously more capital cost, and risk, involved.

And every RV place in South Denver is pretty much at 100%.. there are waiting lists to get on them. You gotta secure one before you buy your RV or boat! So I'm told by a couple neighbors that store their toys.

I really wish I had the means to do it now.

62strat said:

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libertyag said:

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62strat said:

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And the biggest advantage over anything else - you don't have to be there 40 hours a week (or in the case of a restaurant 60-80 hours a week). Gates, security codes, etc. Users come and go as they please.. all they are doing is picking up their boat/rv or dropping it off. You really don't hardly have to be there at all.

The one near me just has a phone number on front of gate; potential new customers just call, and the guy will meet you there. He literally doesn't even have an employee. Current customers use their gate codes. He has two lots on south side of denver.

Very dirty math:

Say 30 acres of land at $15k/acre + $100k for improvements/fencing/security/etc = $550k; 10 years 5% is $5800/mo. Prop taxes (in my state) are another $1k/mo. Lighting, security, utilities (gotta have a dump station), say $1000. All in $8k.

400 slots, at $75 average is $30k/mo or ~$16k after taxes... This guy's is about 1500x500 (~17 acres) and looks to be about 400 slots based on my counting on google earth.

Unless I'm just blatantly missing something, there's doesn't seem to be much else on the cost side. Insurance? Construction trailer for an actual office? Have a few part time high school/college kids to man it.

After 10 years, your profit goes up to $14k/mo. And you work maybe 10 hours a week? At that point pay a full time employee so you don't have to work.

I really want to do this in about 10 years.

But it seems too easy. Just got to find the right balance of not too expensive land, but good location for rvers/boaters.


Edit to add;
forgot about any earthwork/improving land. I'm pretty sure the one I see is just compacted rock/gravel. But asphalt or concrete could be a substantial cost.

---

While I agree with most of your analysis, I don't think many facilities of any size will achieve 100% occupancy. But even at a lesser occupancy rate, the numbers will likely look pretty good. You have to avoid overbuilding in the first place. If the market won't support but 100 units and you build 300, it's going to be a mess. I would build some number of units then build more as the first group is fully occupied and repeat until I couldn't rent them all.

---

Maybe you didn't see my earlier posts: The rental lot I'm referring to is open air. There are no structures.

https://www.google.com/maps/place/Parker,+CO/@39.5034683,-104.7836062,1198m/data=!3m1!1e3!4m5!3m4!1s0x876c91ce239a3d55:0xd49aeed43d2e2426!8m2!3d39.5186002!4d-104.7613633


Guy is right in the middle of town too, but it's unincorporated county, so a great spot. Literally right next to neighborhoods.

I agree, maybe buying an oversized lot and developing/renting half of it for a while until occupancy is up is probably a good idea (so it's not too empty looking), then develop and rent more as that time comes. But you'd still either have to buy all the land at once. Having covered storage is an entirely different business model and obviously more capital cost, and risk, involved.

And every RV place in South Denver is pretty much at 100%.. there are waiting lists to get on them. You gotta secure one before you buy your RV or boat! So I'm told by a couple neighbors that store their toys.

I really wish I had the means to do it now.

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I read your earlier posts but did miss that you said open air. Open air boat storage is something I have never seen and don't think it would fly here. All the boat storage I have seen in Texas, both lakes, bay, and gulf has been covered. Not only covered but in stalls like mini-storage. Won't find many folks around here that would leave a boat in open air storage. Do not see many RV storage places but the ones I have seen are open air.

The one you have sent the link on has to be a money maker!! No improvements at all to speak of, what a deal.

As to having to buy all the land at once, I have on two deals bought what I was certain I would need and done options on the remaining parcel. In neither case did I exercise the option.

As far as the means to do it now, I have had that thought many times over the years. Based on my experience, if it is too costly to do now, it will be too costly to do in the future. Anything of any size will likely involve borrowed money, now and in the future. And you can bet on the land cost increasing at a very rapid rate. Just hard sometimes taking the leap you know you should take.

libertyag said:

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62strat said:

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libertyag said:

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62strat said:

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And the biggest advantage over anything else - you don't have to be there 40 hours a week (or in the case of a restaurant 60-80 hours a week). Gates, security codes, etc. Users come and go as they please.. all they are doing is picking up their boat/rv or dropping it off. You really don't hardly have to be there at all.

The one near me just has a phone number on front of gate; potential new customers just call, and the guy will meet you there. He literally doesn't even have an employee. Current customers use their gate codes. He has two lots on south side of denver.

Very dirty math:

Say 30 acres of land at $15k/acre + $100k for improvements/fencing/security/etc = $550k; 10 years 5% is $5800/mo. Prop taxes (in my state) are another $1k/mo. Lighting, security, utilities (gotta have a dump station), say $1000. All in $8k.

400 slots, at $75 average is $30k/mo or ~$16k after taxes... This guy's is about 1500x500 (~17 acres) and looks to be about 400 slots based on my counting on google earth.

Unless I'm just blatantly missing something, there's doesn't seem to be much else on the cost side. Insurance? Construction trailer for an actual office? Have a few part time high school/college kids to man it.

After 10 years, your profit goes up to $14k/mo. And you work maybe 10 hours a week? At that point pay a full time employee so you don't have to work.

I really want to do this in about 10 years.

But it seems too easy. Just got to find the right balance of not too expensive land, but good location for rvers/boaters.


Edit to add;
forgot about any earthwork/improving land. I'm pretty sure the one I see is just compacted rock/gravel. But asphalt or concrete could be a substantial cost.

---

While I agree with most of your analysis, I don't think many facilities of any size will achieve 100% occupancy. But even at a lesser occupancy rate, the numbers will likely look pretty good. You have to avoid overbuilding in the first place. If the market won't support but 100 units and you build 300, it's going to be a mess. I would build some number of units then build more as the first group is fully occupied and repeat until I couldn't rent them all.

---

Maybe you didn't see my earlier posts: The rental lot I'm referring to is open air. There are no structures.

https://www.google.com/maps/place/Parker,+CO/@39.5034683,-104.7836062,1198m/data=!3m1!1e3!4m5!3m4!1s0x876c91ce239a3d55:0xd49aeed43d2e2426!8m2!3d39.5186002!4d-104.7613633


Guy is right in the middle of town too, but it's unincorporated county, so a great spot. Literally right next to neighborhoods.

I agree, maybe buying an oversized lot and developing/renting half of it for a while until occupancy is up is probably a good idea (so it's not too empty looking), then develop and rent more as that time comes. But you'd still either have to buy all the land at once. Having covered storage is an entirely different business model and obviously more capital cost, and risk, involved.

And every RV place in South Denver is pretty much at 100%.. there are waiting lists to get on them. You gotta secure one before you buy your RV or boat! So I'm told by a couple neighbors that store their toys.

I really wish I had the means to do it now.

---

I read your earlier posts but did miss that you said open air. Open air boat storage is something I have never seen and don't think it would fly here. All the boat storage I have seen in Texas, both lakes, bay, and gulf has been covered. Not only covered but in stalls like mini-storage. Won't find many folks around here that would leave a boat in open air storage. Do not see many RV storage places but the ones I have seen are open air.

The one you have sent the link on has to be a money maker!! No improvements at all to speak of, what a deal.

As to having to buy all the land at once, I have on two deals bought what I was certain I would need and done options on the remaining parcel. In neither case did I exercise the option.

As far as the means to do it now, I have had that thought many times over the years. Based on my experience, if it is too costly to do now, it will be too costly to do in the future. Anything of any size will likely involve borrowed money, now and in the future. And you can bet on the land cost increasing at a very rapid rate. Just hard sometimes taking the leap you know you should take.

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Maybe it's a regional thing. CO does have 300 days of sunshine So open air is seems to be the most common. There are covered ones as well, but of course, it comes with a price. There is a place nearby with basically garages (like a huge 15x40' self storage unit), but it's like $350 a month. Then there is canopy parking around as well.

Yep.. I see people on nextdoor talking about that place saying you get what you pay for (he is cheaper than others around).. but it's obviously mostly full. There will always be a market for people willing to pay less for a step down in quality. All this guy has is a fence. Not even security I don't think. There is a dump station.

Having the means now vs in future: in 3 years I won't have 30k/yr in daycare expenses, this is a certain in my particular situation. So, it most definitely will be something I can afford to do in the future. The disposable income just isn't there right now to take on this kind of risk with any kind of loan. $30k a year saved over 5-7 years lowers the amount of debt I would take on quite a bit.

Land costs go up of course, but that is typically a result of more suburban sprawl.. and more sprawl means the land that is way too far out right now will be a good buy at that time.

We have plenty of sunshine (and no snow or cold winters for things exposed to the weather) in southeast Texas as well. I can see a lot of boat things disappearing (trolling motors, electronics, even lower units) in open air storage. Unless the boat is being stored for an extended period of time, people here would not want to have to remove all the stuff that could be easily taken. Having said that, it evidently is working for that lot owner. I would give my eye teeth to be able to purchase a chunk of land and throw up a fence around it and do little more than that and have a place as nearly full as that one is. Of course, as I mentioned earlier, I don't know of anywhere around here where you can get by without concrete or asphalt roads and sites which could very well cost more than the land itself.

I cannot imagine $30k a year in daycare costs. Once that stopped in 3 years I would have to take a look at doing a deal then rather than saving for up to 5-7 years but perhaps you already have. Good luck if you decide to go for it.

libertyag said:

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We have plenty of sunshine (and no snow or cold winters for things exposed to the weather) in southeast Texas as well. I can see a lot of boat things disappearing (trolling motors, electronics, even lower units) in open air storage. Unless the boat is being stored for an extended period of time, people here would not want to have to remove all the stuff that could be easily taken. Having said that, it evidently is working for that lot owner. I would give my eye teeth to be able to purchase a chunk of land and throw up a fence around it and do little more than that and have a place as nearly full as that one is. Of course, as I mentioned earlier, I don't know of anywhere around here where you can get by without concrete or asphalt roads and sites which could very well cost more than the land itself.

I cannot imagine $30k a year in daycare costs. Once that stopped in 3 years I would have to take a look at doing a deal then rather than saving for up to 5-7 years but perhaps you already have. Good luck if you decide to go for it.

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RV and boat covers are very common here, especially over winter. My neighbor has his boat shrink wrapped when he's done with it in September.. literally. Then in May he cuts it off. It's this thick thermoplastic material, like you see on new cars sometimes when being delivered on a car hauler.

All those things would still disappear with a canopy storage type place.. I assume you meant to compare to garages? You're saying garage storage is your only option down there? How much is that? He has no roads.. just his entrance. Think of landscaping places, or firework stands... they typically don't have asphalt/concrete. Not around here.

yeh daycare sucks.. but wife still takes home more than that after she pays for family health insurance and paying into her pension, which is a paycheck until she dies, so it's a no brainer to keep her working.

2019 will be the last year we have both kids in full time, then in 2022, we'll have a 1st grader and 2nd grader with no daycare.. so ~$25k a year to $0 in 3 years.

We have all sorts of plans for it already of course, but I'll definitely be looking at that time for some sort of residual, eventually retirement, income. RV/boat storage and mountain home are the top contenders right now. A breck vacation home/condo brings in a lot of rental income.