Head Office vs. Behind the Counter

[vaspot]

I would love to one day own a McDonald's franchise or 2, 3, 4, etc. Could stand to own a few chic-fil-a's. Does the franchise model allow for you to run it as an investment? Does it teach you that way? I don't want to flip burgers in my own store. It HAS TO BE possible, although lately a lot of franchise information I've been reading go on about how you're doomed to failure if you don't work the business yourself. I know I've worked in a fast food restaurant or two in my teens ... I never met the owner, or saw hiim walk in, ever! Just the district manager, or "corporate" .. but never the franchise owner.

I do plan on working the first one or two I own ... but ya can't be expected to own 12 stores, and be at every one of them.

Certainly you'll want to be staying at the new franchise you create during the beginning of your operations. Even if you hire management and they hire employees, that doesn't mean that everything is going to be dandy. Management isn't always right, and there could be some conflicts with employees. Just being there will be a good sign and if there are any initial issues, you can resolve them.

After you start the second one, repeat the above process. You don't need to be in 12 places at once, but certainly you should know what is going on in your restaurants.

[hannesa]

Originally Posted by CaptShady

I would love to one day own a McDonald's franchise or 2, 3, 4, etc. Could stand to own a few chic-fil-a's. Does the franchise model allow for you to run it as an investment? .

At the current time, McDonald's doesn't allow absentee ownership for new franchisees.

If you don't want to actually do the work in the franchise, what difference does it make which franchise you select?

Granted, you want it to be profitable, but if you want to be an absentee owner, what difference does it make what you chose, so long as it is profitable?

Originally Posted by CaptShady

Does it teach you that way? I don't want to flip burgers in my own store. It HAS TO BE possible, although lately a lot of franchise information I've been reading go on about how you're doomed to failure if you don't work the business yourself. .

I think you're going to be disappointed with the absentee franchises opportunities out there.

Nature abhors a vacuum. Markets hate them, too. If it's possible to make money by just buying a business and letting others do it, Wal-Mart and GE are already doing it. There's no need to franchise the idea to you if it's really that easy.

I think there are some absentee opportunities out there, but their profitability is WAY lower than the owner-managed opportunities.

Originally Posted by CaptShady

I know I've worked in a fast food restaurant or two in my teens ... I never met the owner, or saw hiim walk in, ever! Just the district manager, or "corporate" .. but never the franchise owner..

But what year was that, Captain?

These days, I think you'll find that most of the older Mickey Dees are not owner managed. However, I have a keen eye for people at places like Subway and Diary Queen for people who are obviously not the typical teenage minimum wage help. I find the owners working behind the counter in those places all the time.

And besides, I'd love to have the money to open a McDonalds... if I did have that kind of money, I wouldn't open a McDonald's, because I'd already be rich.

Good luck on your plan. I tried to find some good absentee franchises, but never really found ones you could live on without owning about half a dozen units.

[vaspot]

Thanks for the input jystrebler. I wasn't aware of any of that.

[bennysumardi]

Everyone wishes they had gotten in on McDonalds back in the 50's - 60's. You would be sitting pretty right now. Because of their great success they have set some pretty large hoops for future franchisees to jump through. One of those hoops is the training portion. You will find that you have to do up to 9 months of training. Keep in mind you are not getting paid as you go through that training. This is all in the hopes of McDonalds recruiting very dedicated franchisees.

Money is always a motivator. I tell my prospective franchisees to rank their motivations. Some investors get blinded by the money potential that they really do not look into the nuts and bolts of being a franchisee. The BIG Name Franchises are not the only ones making money. You want to find the next McDonalds. Like they say, there is more than one way to skin a cat. There is more than one way to make a lot of money in franchise ownership. You can make a lot of money, have a good quality of life, and find a franchise that meets your other motivations by going with some smaller named franchises.

[hannesa]

Originally Posted by omarborrego

Everyone wishes they had gotten in on McDonalds back in the 50's - 60's. You would be sitting pretty right now. Because of their great success they have set some pretty large hoops for future franchisees to jump through. One of those hoops is the training portion. You will find that you have to do up to 9 months of training. Keep in mind you are not getting paid as you go through that training. This is all in the hopes of McDonalds recruiting very dedicated franchisees.

Money is always a motivator. I tell my prospective franchisees to rank their motivations. Some investors get blinded by the money potential that they really do not look into the nuts and bolts of being a franchisee. The BIG Name Franchises are not the only ones making money. You want to find the next McDonalds. Like they say, there is more than one way to skin a cat. There is more than one way to make a lot of money in franchise ownership. You can make a lot of money, have a good quality of life, and find a franchise that meets your other motivations by going with some smaller named franchises.

Great advice, Omar.

[vaspot]

It's not McDonald's that I want. It's multiple franchises. I want to work the business office, not the counter at one store. Right now, I own no franchises, but am part of a business opportunity. I want to work it, parlay it into another. Work that one, and get enough for a small franchise -about 50k start up in total. Work that one, and get another region possibly of the same franchise, and heck, maybe a third. I can't work all 3, I'd have to take on employees. I'd like to buy more, after that. But if I'm being told that no franchise can thrive without the day to day presence of the owner, on an 8 hour day's basis, I want to know how others are doing just that.

[hannesa]

Originally Posted by CaptShady

It's not McDonald's that I want. It's multiple franchises. I want to work the business office, not the counter at one store. Right now, I own no franchises, but am part of a business opportunity. I want to work it, parlay it into another. Work that one, and get enough for a small franchise -about 50k start up in total. Work that one, and get another region possibly of the same franchise, and heck, maybe a third. I can't work all 3, I'd have to take on employees. I'd like to buy more, after that. But if I'm being told that no franchise can thrive without the day to day presence of the owner, on an 8 hour day's basis, I want to know how others are doing just that.

I wouldn't say that "no" franchises can thrive without daily involvement of the owner.

I will say, however, that "most" small businesses (including franchises) can't really do very well without the active involvement of the owner.

("Active" is up to anybody's interpretation. Might just be reviewing the books once a week for 5 hours, might be 70 hours working in the business.)

Also, as you scale up, you should have the money to hire professional managers. So, the more units of almost anything that you buy, the more the opportunity to hire professional managers and free up your time.

As far as "others are doing just that", I'd say "what others?" If they are, you should follow their model.

Maybe some of them started very hands-on, but by the time they bought their 4th unit, they were able to hire managers to help them out.

There are some models that seem to lend themselves better to absentee ownership than others, but you really have to ferret them out.

Also, please keep in mind that a McDonald's owner who bought into the system faced an entirely different reality than the one you face. For the cost of a value meal, you could get exactly the same food in non-inflation adjusted dollars in the early 80s. They charged more, portions were smaller, and the competition either wasn't as common, or the competition did the same stuff.

(Remember when they cooked food and let it sit on a shelf before everybody started using Microwaves to give us all warmed-over food?)

Somebody entering that system 30 years ago made a ton of money, bought multiple units, hired managers, etc.

These days, you'll make less money in that system (my opinion only), and you may not ever make enough to service your debt AND open a second store.

I think the days of absentee franchise ownership are going and soon will be gone. If all you have to do is plunk down a wad of cash and let others run the business, there are a whole lot of people more capable than we are, to do that.

That doesn't mean that maybe you would be very hands-on in the early days, then move to more of a strategic role after you get 2nd or 3rd units.

Good luck. Again, if somebody is doing it, try to do what they did.