Management Franchises for Investors Chapel Hill NC

provided by:

There is a saying among investors that buying a franchise is buying a job. Many franchisees—those who own franchises—work long hours at unglamorous jobs for what equates to less than minimum wage while running their franchises.

Still, many investors are intrigued by the success rates in franchising.

"Franchises are typically in business five years after they start—I think the success rate is like 95 percent—whereas startup businesses don't have anything close to that success rate. So you're buying a track record," Phil Brown, an area developer for Sport Clips, said. "The support mechanism...for franchisees is fabulous."

Franchises are popular among investors for a variety of reasons, but are more often regarded as businesses than pure investments. One of the main draws for investors is the sheer amount of information potential franchisees have available to them—including contact information for current franchisees with the company they are researching—which allows them to conduct careful, detailed due diligence.

"Franchising is the only form of business startup where you can speak with other owners, and even visit other owners, who own the same business as you are considering buying before you invest," Scott Cronk, principal of Murphy Business and Financial Corporation, said.

Further, franchised businesses have proven to be successful, which significantly decreases the risk associated with the investment. "Franchise investors are typically not people who are investing in venture capital or high risk or bio-tech...they kind of have a lower risk tolerance," Jeff Levy, a franchisee of The Entrepreneur's Source, said.