{"id":43751,"date":"2023-04-29T17:37:00","date_gmt":"2023-04-29T21:37:00","guid":{"rendered":"https:\/\/www.thefranchiseking.com\/?p=43751"},"modified":"2023-12-01T11:28:34","modified_gmt":"2023-12-01T16:28:34","slug":"risks-buying-franchise","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/risks-buying-franchise","title":{"rendered":"“Would It Be Risky For Me To Buy A Franchise?”"},"content":{"rendered":"\n
\"the<\/figure>\n\n\n\n

The young man from Portland, Oregon I talked with wanted to own his own business. <\/p>\n\n\n\n

And with only $110,000 to his name (which he didn’t want to lose<\/em>), he felt that buying a franchise would pose less of a risk<\/a>. But would it?<\/p>\n\n\n\n

That’s what this post is about.<\/p>\n\n\n\n

Perry’s Scenario<\/h2>\n\n\n\n

Perry lives at home. <\/p>\n\n\n\n

He works a fairly low-paying 9-5 job<\/a>. But he wants more. Don’t we all?<\/p>\n\n\n\n

The good news is he’s an excellent saver, especially for a 22-year old. He’s been able to amass a little over $100k, and wants to put it to good use. In his case, he wants to use it to start a business. It’s quite inspiring.<\/p>\n\n\n\n

Perry arranged a call with me<\/a> to ask if it would be risky<\/a> for him to buy a franchise. <\/p>\n\n\n\n

Before I answer, what do you think about franchise risks<\/strong>?<\/p>\n\n\n\n

The Risks Of Buying A Franchise<\/h2>\n\n\n\n

Let’s get this out of the way. <\/p>\n\n\n\n

It is<\/strong> risky to buy a franchise. Especially if you’re thinking of doing it without being in a position (financially<\/em>) to do it. I know what you’re thinking. <\/p>\n\n\n\n

“Wait Joel. Perry has $110,000. That seems like enough<\/em>.” <\/p>\n\n\n\n

It’s not. Here’s why.<\/p>\n\n\n\n

First off, the franchise opportunity he’s interested* in requires an upfront investment of $75,000-$90,000. <\/p>\n\n\n\n

So if Perry pays his upfront investment in cash, that only leaves him with $20,000 to $35,000. <\/p>\n\n\n\n

*He’s only interested in the franchise he’s looking at<\/a> because a franchise consultant suggested it. A weak-ass franchise consultant. I’ll tell you why the “consultant<\/em>” is lousy in a bit. Let’s keep moving, because this next part is important.<\/p>\n\n\n\n

Franchises Have Everyday Operating Expenses<\/h2>\n\n\n\n

The franchise Perry is interested in is a part of the home services sector of franchising. If he became a franchise owner, he’d be providing a time-saving service that busy homeowners would like to have<\/a>. But they don’t need<\/em> to have it. <\/p>\n\n\n\n

That said, there are a lot of ongoing expenses franchisees have. <\/p>\n\n\n\n

And even if a portion of the upfront investment includes working capital, it’s not like he’s going to be able to pocket some money for himself. Not at the beginning anyway. And remember, he’d have to leave his job. That means no income coming in. For awhile. <\/p>\n\n\n\n

As to Perry’s monthly business operating expenses, they’d include:<\/p>\n\n\n\n