Todd and Lisa Orenstein work long hours at their Jersey Mike’s sub shop in Huntington Beach. But to the young couple, the hard work will pay off after their first year.
It’s not just about the money,” said Todd. “We both hated our jobs, and then Lisa lost her job. We had some savings from her grandmother, but we didn’t want to spend it just trying to live. That’s when we started looking for franchise opportunities, before we lost our nest egg.”
From Jersey Mike’s to Cold Stone Ice Cream to 7-Eleven, buying into a franchise takes hard work, some cash, and some patience.
“We owned a 7-Eleven for a few years in a less desirable neighborhood,” said Jackie Winston of Spring Valley. “We split the profits with corporate and after years of hard work we barely made even. You have to put up with employee theft as well as customer theft as well as all the other headaches that go with a store open 24 hours. It’s not easy.”
Winston said she sold her store and the new owner — who doesn’t have small children like she does — is faring better than she and her husband.
“I think a young couple without a family or a couple with a lot of family members that they can hire and they trust will do well as franchisees,” she said. “It’s good for some people, but go in with your eyes open.”
Going in also will take your checkbook. In 2012, the total initial investment necessary to begin operations of a Jersey Mike’s franchised restaurant ranged from $243,337 to $492,732, according to their website.
Subway, one of the more popular franchises has start-up costs listed at a cool $150,000
If that’s a little too much bread, an H & R Block franchise will run you about $31,000 and up, depending on the neighborhood and previous sales.
Of course most of these franchises deal with the public and employees. If you are not a people person, you should probably stay in your cubicle.
Franchise Resales, a resource for franchise information and sales, said in a press release that “changes in America’s economy and demographics have created a “perfect storm” of conditions for buying a franchise. Members of the baby boomer generation own more than 100,000 franchise businesses. As these individuals age and begin to make the transition into retirement, they are putting their businesses on the market for potential buyers. The increased availability of startup funds and confidence in an improving economy have also contributed to the creation of an ideal franchise market.”
Most franchisees don’t make millions- unless they own 10 or 20 stores. And average gross profit split with 7-Eleven is 48-52, with the franchisee earning the 48%. Chik-fil-A splits the profits 50/50 with their franchisees.
Before you get your hands dirty with ice cream, mayo, or cherry Slurpee, download the Small Business Association’s hand guide on becoming a franchisee. There can be some hidden costs in the long contract. Often, franchisees don’t realize that the company has more control than they do over their day-to-day operations.
“When it came down to it they told us what to do and when to do it,” Winston said. “I felt more like an employee than an owner,” said Winston.
But the Orenstein’s are happy with the name recognition and the banners and ads taken out by their corporate company and say that they couldn’t do as well if they opened their own sandwich shop. “They have our back and we sell a great product,” Todd said. “Is everything perfect? Absolutely not, but I went into this with my eyes wide open. I’m here to work hard and make money for my family while I enjoy the process. As my dad always said, ‘It’s called work for a reason.’”