Franchising : The Expectation

Franchising, is practically using firms with their successful business models to generate profits for both franchisor and franchisee, but never ever thought of there would be any losses or risks involved that would both to consider as "SHARING". Of course any losses or profits involved would put franchisee upfront to feel the heat and the cool.

The typical risks or difficulties would be inflation, renewals, location, re-locate, competitors, natural disasters, population decreasing factor, riot, national threat, staff turnover, machine breakdown, no electricity, no water, change of policy in agreeement and etc... while, formula of ROI would be brain-teaser after all. Why would we buy a business if we are not sure about return on investment?

* Considering Savings invest in Fixed Deposit, and Savings + Loans invest into Fixed Deposits.

Example 01 :
Investment Capital Return 1,000,000 plus 200,000 gain.

Example 02 :
Investment Capital Return 1,000,000 with 0 gain,
Loan Company Get theirs Capital 2,000,000 with gain 600,000

Therefore, Loan company getting their shares of profit out from franchising businesses.
Considering getting a loan would impact the franchisee of the return of investment.

The expectation in Point Four is hard to get, even without involving any loan and interest.
During this initial 5 years, it is very important that the typical risk involved in franchise would not happen to secure the investment as well as to breakeven. Learn to protect the investment and how return of investment and return of capital as well.

* Sincerely thanks for the article


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