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Anyone here ever own or currently owns a franchise?

Discussion in 'The Okie Corral' started by pugman, Mar 30, 2012.

  1. pugman

    pugman

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    I have the opportunity to buy a fitness gym (think like a SNAP or Anytime Fitness)

    Its been in its current location going on six years. It was started by another guy (who still owns the building its in) but was sold back to its corporate office after he and they butted heads on what he was allowed to do. This would be made very clear to me before I dropped a penny. I'm surprised it went this way considering the man owns a very successful chain of cellular stores.

    I've also been going to it as a member for the past 6 months and even work the desk one night a week (to get my free membership :supergrin:) and have a very good idea how its run.

    Its current revenue stream is decent - but it has gone through a string of 20 something college kids who basically looked at it as a way to get a paycheck by doing nearly nothing. The guy who currently manages it started in October and found nearly $4,000 in cash and checks in the backroom because previous managers didn't know what to do with it (as an auditor I can tell you the internal controls of the company are terrible).

    There is a lot of opportunity to improve the gym and its image through advertising, getting involved in local events, adding wifi, getting someone in there with a geniune interest in the place to put some of its vendors (like Coke whose pos vending machine is broke three weeks a month) in its place considering how lousy their service is, etc. As I build my business model in my eyes the gym is priced basically for the equipment alone.

    So...anyone own a franchise? Did it make you a millionare or cause you premature baldness?

    For the record, I would keep my current job for the time being.
     
    Last edited: Mar 30, 2012
  2. Viper16

    Viper16

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    I would KILL to own a Chick-Fil-A in a busy part of my town...from Sun up to Sun down Monday thru Saturday, they are always slammed with business!
     

  3. ThatGuyDave

    ThatGuyDave

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    My father owned a Snap-On Tool franchise in Michigan. In the late 80s and 90s, he made mad money, put both my sister and myself through private school K-12. When the economy and auto industry went bust it changed quickly from mad money, to having to reposess tools, and making barely enough money in a day to cover the gas required to drive around. So I would make sure you do a very thorough investigation of the local economy and also look into local corporations that you could offer a discounted rate to its employees to get them and thier friends and families to begin working out there. It's a major risk but the payout can be awesome.

    Good luck to you in whatever decision you make!
     
  4. mj9mm

    mj9mm

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    maybe give the corporation a call and ask for a preliminary meeting, get their side of this story and how they will help you succeed.:wavey:
     
  5. slick64

    slick64

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    If he owns the building....and had a falling out, I don't think its a good safe place to stay put.
     
  6. mgs

    mgs Always Carrying Millennium Member

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    Just ate at a Steak & Shake for the first time......it was great. My wife said we should open one in our area......at 52 I'm ready to retire after 30 years of working one and or two jobs. I'm sure it would cost $$$$$$ and a lot of time, Mike.
     
  7. Dalton Wayne

    Dalton Wayne Epic mustache Millennium Member

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    I owned a gas station franchise in the early 80's but the entire company went toes up and closed I had my station a year.
    never again lost my investment my job, it was a service station where I did breaks tune ups and oil changes, they made the money off the gas and oil I made the money off the garage soda cigs and other c-store items.
    Now I manage a gas station but have no investment
     
    Last edited: Mar 30, 2012
  8. Glockdude1

    Glockdude1 Federal Member CLM

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    :agree:

    The Chick-Fil-A's here are the same way. :eat:
     
  9. jtull7

    jtull7 Pistolero CLM

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    One has to be very, very careful. Unscrupulous franchisors charge you a huge fee to get the franchise, based upon rosy financial projections, and then starting to kill you through a myriad of fees and rising costs. They end up making more money than you do, off of your hard work.

    I have seen, in my legal career, a number of retired couples put their entire net worth into a franchise opportunity and then, a couple of years later, losing it all and having to go into bankruptcy. Very sad.
     
  10. glock1988

    glock1988

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    I have owned a franchise and now operate independently. My experience with them was not a positive one. I would be more than happy to share my experience with you outside of this forum.
     
  11. Bilbo Bagins

    Bilbo Bagins Slacked jawed

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    I know a guy who owns 2 of them. He is doing very well, but if I'm not mistaken, it was a lot to get in.

    Chick-fil-a and if you are from the eastcoast, Wawa Gas Stations, are always busy.
     
  12. 1-2man

    1-2man Part Time

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    Kind of like being in a condo. I know plenty restauranteurs (I am in the wholesale end of the business) who have pulled away from the franchise due to not only the fees but the lack of being able to make changes to their establishments. What works well in one city may totally flop in another.
     
  13. wjv

    wjv Zip It Stan Lee.. . .

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    Ongoing franchise fees and restrictions can be killers.

    Better to be your own boss.

    I don't think most people are impressed by franchise brand names. Give good service/value and be just as successful.
     
  14. hamster

    hamster NRA Life Member

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    I'd eat all my own inventory. Would NOT be a good business for me.
     
  15. Deanster

    Deanster Cheese? CLM Millennium Member

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    As above - franchises aren't inherently bad, but it's far easier to sell franchises for a living than it is to operate businesses, which is why they're selling franchises.

    The big issue is that to succeed you need to be always selling, but with a franchise, there's often profound limits on what you can do to promote your business, fix problems that push customers away, or deal with the fact that other local franchisees are screwing over customers, which makes them unwilling to come to your place.

    If the business is distressed, and you can acquire it at distressed rates, the right path might be to run it independently, grow it until you have a solid membership, and then sell it to one of the major chains... all the while avoiding the franchise situation.

    At the very least, talk to a BUNCH of current franchisees, including some who are unhappy (there's always some) and find out why.
     
  16. pugman

    pugman

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    He owns the building and has one of his cellular stores in it.

    I'm only getting one side of it - but the falling out was two sided. He paid cash for the franchise and equipment and the company said "hey, instead of buying one why not finance four?" Ironically, his cellular stores sell the service of the company who I worked for ten years. He is a good businessman but is also known as an a**.

    Frankly, I think he would rather have a personal owner in there rather than it currently being a corporate owned place.

    As for location its nearly perfect. No other gym like it for nearly 15 miles in any direction and it draws a pretty small but loyal membership.

    As for the franchise fee...$15,000. Haven't gotten details yet on the monthlys
     
  17. philcam

    philcam

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    How much longer is his franchise agreement?

    If you're buying it gym for the cost of equipment, and it's established, maybe you can get out from under the franchise and run your own gym. Of course the membership contracts and dues are actually owned by the franchisor and not the franchisee, so that may present an issue.
     
  18. CAcop

    CAcop

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    My wife has family that was in fast food franchises all over the place. They made enogh money he could turn it around and buy up properties and then build on them.

    The big downside was he was always working and eventually corporate exerted too much control over the business. He essentially became an employee vs. a business oner. He sold all his franchises but kept the buildings. Now he is semi retired and lives off of rent.

    I wouldn't go in on a franchise unless the contract was iron clad that I could run it how I saw fit. If they wanted me to run it their way because their MBAs told them that is how a gym is supposed to work I would pass. Gyms have to be flexible. Bikram yoga classeswhere everybody is passing gas in at 105 degree room may be big in CA but in rural KS they may not do so well.
     
  19. DanaT

    DanaT Pharaoh

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    What does the Acid Ratio for the business look like?

    -Dana
     
  20. kiole

    kiole

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    Seems like McDonald's and Dunkin donuts are sure things around here. The number of locations in my state have increased 500% and never have I seen one fail.