Any bogleheads have a franchise?

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Billy Pilgrim
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Any bogleheads have a franchise?

Post by Billy Pilgrim »

I am just curious.
rylemdr
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Re: Any bogleheads have a franchise?

Post by rylemdr »

Billy Pilgrim wrote:I am just curious.
Not this boglehead.. :(
airahcaz
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Re: Any bogleheads have a franchise?

Post by airahcaz »

Hard to believe that no boglehead here has a franchise?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
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pteam
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Re: Any bogleheads have a franchise?

Post by pteam »

I don't get the feeling that a lot of bogleheads are entrepreneurs or business owners. From what I have read over the years most bogleheads goto work everyday and live very frugally, often times when they have a lot of money they don't spend any of it even on things they enjoy and sometimes even die with all of it!!!

Personally I'm an entrepreneur and concentrate on building businesses and making as much money as I can so I don't have to work for a boss everyday :)
Wagnerjb
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Re: Any bogleheads have a franchise?

Post by Wagnerjb »

pteam wrote: From what I have read over the years most bogleheads goto work everyday and live very frugally, often times when they have a lot of money they don't spend any of it even on things they enjoy and sometimes even die with all of it!!!
Don't assume that Bogleheads are frugal tightwads just because we believe in low-cost investing. I am sure there are some very thrifty people here, but those with "a lot of money" don't need to brag about it here. What good does it serve to boast about your Mercedes, your country club membership, your $5000 watch and your $1 million home? While that may feed the ego of an insecure poster, most well-balanced individuals will keep their high-end lifestyles off this board.

Best wishes.
Andy
staythecourse
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Re: Any bogleheads have a franchise?

Post by staythecourse »

Wagnerjb wrote:
pteam wrote: From what I have read over the years most bogleheads goto work everyday and live very frugally, often times when they have a lot of money they don't spend any of it even on things they enjoy and sometimes even die with all of it!!!
Don't assume that Bogleheads are frugal tightwads just because we believe in low-cost investing. I am sure there are some very thrifty people here, but those with "a lot of money" don't need to brag about it here. What good does it serve to boast about your Mercedes, your country club membership, your $5000 watch and your $1 million home? While that may feed the ego of an insecure poster, most well-balanced individuals will keep their high-end lifestyles off this board.

Best wishes.
Agree 100%. There are many on here who are small business owners or who have gone public with their companies. Folks on here are a lot like real life there are many in the middle and a few on either extreme. BTW, what is wrong with LBYM? Is it better to advocate spending money when you have it without any concern about future obligations?

My opinion has always been, at best, 20% of folks in life even think about the financial ramifications of their decisions and there are probably only <1% who have the ability to think 2-3-4 steps ahead how that decision will affect them 10-20 years from now. The ability to think 2nd or 3rd order thinking is a trait that most SHOULD be aspiring for in their lives. It would have saved the 62 year old in 1999 who was 3 years away from retirment from being 80% equities or the young 25 year old to buy house in 2005 for a house they could only afford with 80% of their joint income and no down payment.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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dandan14
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Re: Any bogleheads have a franchise?

Post by dandan14 »

We are considering purchasing one. I came pretty close a few years ago, and we are currently working with a franchise broker. We're also evaluating a non-franchised business that is for sale in our area.
PacNorWest
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Re: Any bogleheads have a franchise?

Post by PacNorWest »

Yes, I purchased a franchise many years ago.
Once I was in the business I found that I could do better on my own.
Fortunately, I formed the business in an adjoining county - not my home turf - which was against the franchiser's rules and a mistake on the part of their salesman.
It was through that error on their part that I was able to wiggle out of their grip.
tonsofthorns
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Re: Any bogleheads have a franchise?

Post by tonsofthorns »

We have a quick service restaurant. The restaurant is about 60 years old. It has turned out to be one of my families best investments. It was 60-80 hrs a week the first three or four years. Now it has an established crew and time in the store is a lot less, which gives us time with our children.
I think it is very important to diversify, thus we have a small business, rental properties and retirement funds. In my opinion, I believe these three are key to wealth building.
i<3Investing
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Re: Any bogleheads have a franchise?

Post by i<3Investing »

tonsofthorns wrote:I think it is very important to diversify, thus we have a small business, rental properties and retirement funds. In my opinion, I believe these three are key to wealth building.
I've always felt that way as well. Eventually I'd like to find myself in a place where I have 33% of my wealth across each of the following: real estate, businesses, and stocks/bonds. Currently I'm 60%/40% stocks and real estate respectively but this is a very long term goal. I feel that if each one of those three investments could support me retiring I would be pretty stable. Only time will tell.
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Clearly_Irrational
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Re: Any bogleheads have a franchise?

Post by Clearly_Irrational »

i<3Investing wrote:
tonsofthorns wrote:I think it is very important to diversify, thus we have a small business, rental properties and retirement funds. In my opinion, I believe these three are key to wealth building.
I've always felt that way as well. Eventually I'd like to find myself in a place where I have 33% of my wealth across each of the following: real estate, businesses, and stocks/bonds. Currently I'm 60%/40% stocks and real estate respectively but this is a very long term goal. I feel that if each one of those three investments could support me retiring I would be pretty stable. Only time will tell.
This three part split describes how my plan is setup as well. Each of them seems to have different advantages and disadvantages that work well together.
staythecourse
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Re: Any bogleheads have a franchise?

Post by staythecourse »

Clearly_Irrational wrote:
i<3Investing wrote:
tonsofthorns wrote:I think it is very important to diversify, thus we have a small business, rental properties and retirement funds. In my opinion, I believe these three are key to wealth building.
I've always felt that way as well. Eventually I'd like to find myself in a place where I have 33% of my wealth across each of the following: real estate, businesses, and stocks/bonds. Currently I'm 60%/40% stocks and real estate respectively but this is a very long term goal. I feel that if each one of those three investments could support me retiring I would be pretty stable. Only time will tell.
This three part split describes how my plan is setup as well. Each of them seems to have different advantages and disadvantages that work well together.
Interesting. I see it as the opposite. If you own stocks you are already a small business owner. Mr. Graham spends a lot of time in Intelligent Investor describing that association. If you own REITS it is similar (ageed not the same) as owning private real estate. I think either of the other two is an UNcompensated risk. You are taking on a lot of geographical risk with either owning your own real estate and/or small business. That risk does not come with an increased expected return. Also, in both situations one is competing with professionals. IF you were a SBO or real estate guy during your working life makes sense, but if you have never done it and want to start at the end of your career you are competing with A LOT of experts.

Also, if the economy goes south stocks are going to drop, your small business profits are likely to fall, and folks may not be able to pay their rents all at the same time. So I don't see the diverification benefit.

I'm not disagreeing with the concept just doesn't seem like it would be that more beneficial then just owning stocks and REITS respectively.
That is not even including the upfront costs and hassle to buy/manage real estate or your own business in retirement.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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Clearly_Irrational
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Re: Any bogleheads have a franchise?

Post by Clearly_Irrational »

staythecourse wrote:Interesting. I see it as the opposite. If you own stocks you are already a small business owner.
I disagree, especially if we're talking about an index fund. An index fund is a broad bet on the economy in general, you have basically no control and the investment has basically zero leverage or scaling potential. It's essentially a high risk savings account. If you have a significant stake in a company and regularly sit on the board meetings then yes you're probably right, but that's not what we're discussing here. Owning a small business has many unique characteristics compared to a financial asset, tax treatment for example can very favorably add to your overall financial picture. You're certainly correct that direct business ownership tends to be less diversified, but the correlation with the market will heavily depend on what industry you're in.
staythecourse wrote:If you own REITS it is similar (ageed not the same) as owning private real estate.


I understand that some people think that, but my own experience argues otherwise. For one, the real estate market is far less liquid and accurately priced than the financial markets which means it's still possible to add alpha with direct purchases. I would never argue that anyone should put all of their money in real estate, but the cash flow generation capabilities are far better than a financial portfolio. Rents aren't much affected by volatility and sequence of returns problems for example.
staythecourse wrote:I think either of the other two is an UNcompensated risk.
I strongly disagree. In fact most well off people (who didn't start that way) are there because of either real estate or small business ownership.
staythecourse wrote:Also, if the economy goes south stocks are going to drop, your small business profits are likely to fall, and folks may not be able to pay their rents all at the same time. So I don't see the diverification benefit.
I can't speak for everyone else, but my rents actually went up during the crises as demand for rentals rose.
staythecourse wrote:That is not even including the upfront costs and hassle to buy/manage real estate or your own business in retirement.
This I agree with, it is more complicated and part of your compensation is for the annoyance value.
Default User BR
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Re: Any bogleheads have a franchise?

Post by Default User BR »

Clearly_Irrational wrote:
staythecourse wrote:Interesting. I see it as the opposite. If you own stocks you are already a small business owner.
I disagree, especially if we're talking about an index fund. An index fund is a broad bet on the economy in general, you have basically no control and the investment has basically zero leverage or scaling potential.
Not to mention that most of what we think of as small businesses aren't publicly traded or generally even have stocks. The parent companies of franchises might be held in your index funds, but not the restaurants, stores, service providers etc. that are owned by individuals.


Brian
i<3Investing
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Re: Any bogleheads have a franchise?

Post by i<3Investing »

staythecourse wrote: Interesting. I see it as the opposite. If you own stocks you are already a small business owner. Mr. Graham spends a lot of time in Intelligent Investor describing that association. If you own REITS it is similar (ageed not the same) as owning private real estate. I think either of the other two is an UNcompensated risk. You are taking on a lot of geographical risk with either owning your own real estate and/or small business. That risk does not come with an increased expected return. Also, in both situations one is competing with professionals. IF you were a SBO or real estate guy during your working life makes sense, but if you have never done it and want to start at the end of your career you are competing with A LOT of experts.

Also, if the economy goes south stocks are going to drop, your small business profits are likely to fall, and folks may not be able to pay their rents all at the same time. So I don't see the diverification benefit.

I'm not disagreeing with the concept just doesn't seem like it would be that more beneficial then just owning stocks and REITS respectively.
That is not even including the upfront costs and hassle to buy/manage real estate or your own business in retirement.

Good luck.
My thought has always been that I have more control over a small business / personal real estate, than I do over stocks. For example, I can work more hours at my own business to earn more revenue if I had to. I can't really work more hours to earn the S&P more, or it's not a guarantee that the company I work for will allow me to work overtime. I like to have some control. Don't get me wrong, I still max out my 401k and RothIRA, I just put any leftovers into buying properties or eventually starting a small business. As I said in my original post I would like all three categories to lead to retirement eventually.
orlandoguy
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Re: Any bogleheads have a franchise?

Post by orlandoguy »

I do not own a franchise personally, but used to work for several companies that were franchisees of numerous hotel and restaurant brands. I have since gotten my Ph.D. and transitioned to academia. Among other courses, I teach an elective course in franchising to senior-level undergraduates. Being a franchisee is not for everyone, but it certainly can provide great benefits in terms of brand exposure and operating systems, albeit for a price.

Orlandoguy
airahcaz
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Re: Any bogleheads have a franchise?

Post by airahcaz »

What happens if you own a franchise and the parent company goes under?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
BYUvol
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Re: Any bogleheads have a franchise?

Post by BYUvol »

airahcaz wrote:What happens if you own a franchise and the parent company goes under?
It depends on the franchise, but of the instances I personally know of, franchisees are still allowed to operate under the name, they just no longer pay royalties, and have to procure their own ingredients.

The one I specifically know of in the area was Hogi Yogi (sandwhich place). Several of the owners purchased things like cups/plates/plastic ware together in one big lot to get better prices. After a while they ended up just selling their locations.
RenoJay
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Re: Any bogleheads have a franchise?

Post by RenoJay »

I have started a number of businesses. In 2009 I looked into franchises, and was turned off by the high fees, high workloads and low expected returns. (What's the point of investing $250k up front and working 60 hours a week just to earn $40k?) Anyway, I've always done better starting my own businesses. Coincidentally, I inquired on a franchise this morning after getting the idea in my head that payday lending could be lucrative. That said, I'm reasonably confident I'll read the info then decide not to pursue it.
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