Surreal Entrepreneur

A purist entrepreneur might shake their head at the idea of franchising or managing a company story. However these are very solid places to start learning the ins and outs of business. It is just like any educational standpoint except it could be even more hands on in some ways. Today I’d like to answer some of your questions concerning the difference between Franchisee and Manager of a franchise store.

For illustration purposes I will refer to two well known examples of management types, MacDonald’s and UPS.

Franchisee:

With enough money you can buy a MacDonald’s franchise. First you will have to pony up a $500,000+ down payment in order to be considered for a franchise location. On top of that you will have to pay a premium for the education at Burger University, along with all of their help and resources for business management and marketing. Also you will have to pay about 4.00% of what the store makes. Lastly you will have to pay rent based on what the store makes as well.

Pros:

• You are buying a turn-key business model that is proven to work
• You have the support of a big brother that will partner with you on marketing and let you use their already established name brand
• Lower inventory costs
• You receive and education about how to effectively run things

Cons:

• You have limited room for creativity and innovation and also less autonomy
• Ongoing payments for the life of the business to the mother-ship
• Higher start up costs

Manager of a franchise store:

As the manager of a franchise store you will be placed in a position of authority over a complete staff and running a current system that the franchiser puts in place. Instead of worrying about all of the branding and large marketing, the parent company will take care of it for you. You will, in essence be in charge of maintaining the operations of the store and keeping everything running smoothly so you can make more money for your parent company. For instance UPS will hire someone above the age of 18 on a modest salary and benefits to someone for running all the logistics of that particular store.

Pros:

• Steady income and benefits based on loose metrics of productivity
• Proven model and direction in which to move

Cons:

• Lack of control over your business
• Only receiving a salary instead of dividends of the profit you make
• Lack of opportunity for creativity

Overall it is a pretty cut and dry decision. If you are looking to get into a business for experience then you should start as a Manager at a current store. If you are looking for some more autonomy and have experience running a business it is most likely more lucrative, although less safe, to buy your own franchise.