Ever wondered how franchise owners make their money? Whether you are buying a franchise or starting your own business from scratch, it’s important to know what to expect regarding how you will get paid. In many cases, an owner has to work to build the business before taking home a paycheck. At the same time, a business venture isn’t sustainable if it doesn’t pay the bills.
Like any business owner, a franchisee typically makes money from the business’s profits. While some franchise owners can pay themselves a salary, earnings generally come from excess revenue after accounting for the overhead costs.
Frequently Asked Questions
How Much Can Franchise Owners Make?
For more information, read our blog: How Much Can You Make as a Franchise Owner
What Are the Overhead Costs of Franchise Ownership?
- Equipment (purchasing or leasing)
- Staffing (wages and benefits)
- Royalty fees
- Advertising fees
Keep in mind that this is not an exhaustive list. The total amount of overhead expenses will depend on each franchise. For instance, a home-based franchise likely won’t have to pay rent for an offsite location. Furthermore, a restaurant franchise might require a larger staff than a coffee shop franchise. However, all businesses will have some amount of overhead costs to consider.
What Are the Responsibilities of a Franchise Owner?
- Pay franchise fees and royalties
- Acquire and establish a physical location for the business
- Hire, train, and manage employees
What Factors Affect a Franchise Owner’s Income?
- Overhead Costs – It goes without saying that the expenses for operating a business will affect the total profit, which will impact the franchise owner’s income.
- Industry – Each industry will offer different income potentials for franchise owners. For example, a fast-food franchise is likely to generate more revenue than a coffee kiosk. At the same time, a coffee kiosk will probably have a lower overhead than a restaurant. All of these variables will impact the franchise owner’s final income.
- Location – The location of a franchise will also impact the bottom line. A franchise located in a big city or a high-traffic area has a greater potential to produce more income than one in a small city or a quiet spot of town.
- Business Expertise – The personal skills of each business owner can also impact their total income. Franchisees who are knowledgeable, resourceful, determined, and always willing to learn and adapt to market changes are likely to increase their location’s financial success.
- Investment Strategy – A franchise owner might choose to invest their profits back into the business. While this would require forgoing income for a period of time, it could ultimately increase the success and value of the business.
Start Franchise Ownership On the Right Foot
Clearly, there are a number of factors that will affect a franchise location’s profits. If you are considering franchise ownership, then it’s important to find a franchise that matches your goals. FranNet is here to help you find the perfect fit. Our expert franchise consultants will help you evaluate hundreds of verified brands and make sure you get connected with the right franchise. We will provide you with resources and guidance every step of the way. Schedule your free consultation today!