Our world today is in a much different state than a few years ago, let alone 5-10 years ago. Some of this is really good, like COVID numbers going down and tourism going up. But other areas are presenting some new challenges, such as sky-high inflation rates – a 40-year high as of March with no sign of slowing– and a treacherous war across the globe.
Many people say to me that they are craving security, diversification, and multiple streams of income. These uneasy times have made a lot of people start questioning their traditional time and money investments and seeking alternative ways to invest and diversify.
Investment Instability
One of the biggest investment issues of late is the crazy real estate market. Real estate investing was a go-to for many people, either purchasing and flipping or using as rentals and thus, creating an additional cash flow.
A booming real estate market puts the breaks on real estate investing for many people. Prices are so high that they create a barrier to entry with little hope of a return any time soon.
Likewise, the market has been topsy turvy lately, too, with the traditional stocks and bonds lacking the stability a lot of investors are looking for.
With all this in mind, a lot of people have been asking me lately, “where should I put my money?”
Stability and Options in Franchising Models
Have you considered franchising?
It can be a solid, stable investment option since new businesses and locations are being built every year. And according to the International Franchise Association, franchise businesses are growing faster than non-franchise businesses.
If you’re already content in you job, you might immediately dismiss this idea thinking that buying a franchise automatically means operating it, too. Not true!
There are actually three different franchise models:
- Owner model. This is certainly what most people think of when they think about franchising and is pretty common. Especially for those looking for a new career path and wanting to be completely hands-on with their investment. Owning and operating the franchise becomes a full-time job.
- Manager-run model. This is a sort of hybrid between the owner model and the investor model. You keep your job while you purchase the business and hire a general manager to run the business. You meet with the manager regularly and strategize, then track metrics and adjust course as necessary. This is around a 20-hour a week commitment and ideal for an executive.
- Investor Model. Like the manager-run model, you keep your job and let the manager handle running the business. Your interaction with the business and strategizing is more high level with around a 10-hour commitment per week.
The more hands off you are with the business, the more the initial investment – more money goes to equipment, technology, buildouts, working capital, manager’s salary, etc.
Benefits to Franchise Investing
One of the little-known things about franchising is the excellent investment opportunity it can offer. I have seen some of my owner/operator clients thrive in their new careers and grow their businesses, thereby growing the business’ value.
I’ve also had investor model clients who enjoy building their own franchise business while keeping the security of their full-time income. Once they have replaced their income, they can continue to work full-time or transition to business ownership with a predictable revenue stream.
Franchising can truly cater to each owner’s unique situation.
Multiplying into additional locations/territories is one more benefit of the franchise model. It’s much easier to open multiple locations from the same brand, have economies of scale and truly utilize the “rinse and repeat” model of franchising. This is how many franchisees have accomplished significant earnings AND equity through growth over time.
When compared to real estate investing, even in a slow market, the benefits are twofold. Unlike real estate where in most cases you build up more equity than cash flow, franchising can give you equity AND cash flow.
And as I mentioned last month, there are no glass ceilings with franchising. Your success, growth, and respect are earned by hard work, resilience and hustle. This extends to all three models of franchising.
Before you continue to invest in your typical investment strategies, why not explore the investment benefits of franchising?
