Any FRANCHISE owners here?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
blackwater
Posts: 43
Joined: Sun Nov 24, 2013 2:17 pm

Any FRANCHISE owners here?

Post by blackwater »

I am thinking seriously about opening a dunkin' donuts franchise and would appreciate any insights on owning and operating a franchise. I know the general requirements and will be attending a seminar hosted by dunkin donuts.

Can any franchise owners share their experience?

What worked for you, what didn't?
Would you do it over again?
What kind of profit margin can I expect?
What are some major pitfalls?


Thanks!
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Any FRANCHISE owners here?

Post by livesoft »

I am not a franchise owner, but my in-laws are. I haven't seen them since. They work all the time including holiday, Christmas, New Year's, etc. All the time. But they don't have to get up very early like donut franchisees.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
William4u
Posts: 1445
Joined: Fri Jun 01, 2012 3:02 pm

Re: Any FRANCHISE owners here?

Post by William4u »

I have a friend that owns 3 fast food franchises. Two things come to mind:

1. Analytics, analytic, analytics. It is important to run the data (and run lots of data) to get a handle on things. My friend is running numbers and interpreting numbers all the time. Pounds of buns per week per dollar. Number of people who come in for breakfast, lunch, dinner, on Tuesdays vs Fridays. What trends are there. Etc etc etc. Learn to love the math and gather all the data you can. If it can be measured in numbers, it is important.

2. Work work work. Franchise owners work ALL the time, as livesoft also mentions. 100 hour weeks are the new normal.
Busting Myths
Posts: 353
Joined: Sun Oct 24, 2010 4:04 pm
Location: So Cal

Re: Any FRANCHISE owners here?

Post by Busting Myths »

http://www.bluemaumau.org/sba_franchise ... brand_2012

The U.S. Small Business Administration put out loan default rates by Franchise sometime in 2012. Some sobering data to say the least.
Ron
Posts: 6972
Joined: Fri Feb 23, 2007 6:46 pm
Location: Allentown–Bethlehem–Easton, PA-NJ Metropolitan Statistical Area

Re: Any FRANCHISE owners here?

Post by Ron »

My parents were, back in the 60's (fast food).

It tore the family apart (literally); parents got divorced, I enlisted in the military at age 17 just to get away. Franchising is not an automatic, guaranteed means to financial or any other measured success.

From the month I turned 14, I worked every day I wasn't attending school. That meant 10-12 hour shifts on weekends, holidays, and summer vacation (whatever that is). And my "pay"? Not a cent. I was expected to do it since I "owed" them room & board for just being alive.

The idea that my parents tried to build their life somewhat based upon my labor at an early stage of my life still makes me angry - more than a half-century later, and even though they are long gone.

Since you asked...

- Ron
edge
Posts: 3833
Joined: Mon Feb 19, 2007 6:44 pm
Location: NY

Re: Any FRANCHISE owners here?

Post by edge »

Way too risky. The only way it pays off is if you get the trend right and avoid fads (cupcakes anyone?) and you quickly scale up(many many stores) and use that to diversify (using a lot of leverage).
Skiffy
Posts: 232
Joined: Tue Oct 30, 2007 2:13 pm

Re: Any FRANCHISE owners here?

Post by Skiffy »

I've worked for a franchise owner. He never felt that the 4% that they peeled off the top was worth it, nor when they tell you the hours you must be open. Then just running a business-if the owner isn't present there is theft ($ and what ever isn't nailed down), free give aways and employee turn over is always a problem. Yes he made a living but he wasn't get rich.
User avatar
StevieG72
Posts: 2200
Joined: Wed Feb 05, 2014 8:00 pm

Re: Any FRANCHISE owners here?

Post by StevieG72 »

DUE DILIGENCE!

I own a convenience store franchise, no regrets.

I have colleagues that have many regrets, poor location, low volume, and low gross profit to name a few.

I would recommend talking to a current Dunkin Donut franchisee to get some idea of what to expect. The franchisor is very limited as to what they can discuss with potential franchisees due to liability issues.

My work life balance is manageable, I do not work excessive hours.

It can be a great opportunity if the numbers are right, it could also be a financial disaster.
Fools think their own way is right, but the wise listen to others.
User avatar
Will do good
Posts: 1138
Joined: Fri Feb 24, 2012 7:23 pm

Re: Any FRANCHISE owners here?

Post by Will do good »

We owned a Baskin Robbins in the 90's, just in time to see the ice cream business started to go down.
My wife ran the business for few years, we were always working, name the holidays and we were busy. But we never made much from it.
The happiest day was when the building was on fire and we lost our business, we got "Congratulations", "You are so lucky" from many other BR franchise owners.
Maybe the franchise business are better these days, but we wouldn't buy one even if someone is willing to sell it for 50% off.
Best of luck.
jbmitt
Posts: 657
Joined: Mon Jul 14, 2008 1:00 am

Re: Any FRANCHISE owners here?

Post by jbmitt »

@ Will do good.. you didn't happen to be in Oxford, Ohio. Sounds like a similar scenario to the BR there.
User avatar
Steelersfan
Posts: 4125
Joined: Thu Jun 19, 2008 8:47 pm

Re: Any FRANCHISE owners here?

Post by Steelersfan »

I go to a Dunkin' Donuts place near me several times a week so I get to hear some of the conversations between the employees and owner/manager.

Tremendous turnover in employees. Most seem to last only a few weeks and the hours have to be an impediment. I expect that varies by location.

For the last month, the owner has usually been there with only one employee and he's been the one server manning the counter. The other employee mans the kitchen. He might be a relative. I overheard a conversation with another customer who seemed to be an owner of a local store (of some kind, not necessarily a Dunkin' Donuts). The conclusion of their conversation? If you can't get a relative to be the manger, it's got to be the owner.

YMMV

But I still go to that Dunkin' Donuts because I really like their coffee and donuts, although I feel bad for the owner/manager.
User avatar
LadyGeek
Site Admin
Posts: 95466
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Any FRANCHISE owners here?

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (owning a business).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Any FRANCHISE owners here?

Post by livesoft »

It appears that all the franchise owners are working hard, so they have no time for internet forums.
Wiki This signature message sponsored by sscritic: Learn to fish.
Lafder
Posts: 4117
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Any FRANCHISE owners here?

Post by Lafder »

I had neighbors who owned several Baskin Robbins. They were always working in the store before holidays making ice cream cakes, otherwise I never saw them working behind the counter. In general they had great managers and what seemed to be a bunch of teen employees. They made a lot of $$$ and seemed to have a fair amount of free time. They tired of the businesses and sold for hundreds of thousands.

Another couple I knew had bought a Dunkin Donuts franchise and built/opened from the ground up. They hated it. They would get calls at 3 am that the second baker had not shown up and one of them would have to rush in to make the donuts. They had thought it would be easy cash flow with little work. They had a terrible time finding reliable workers. By the time they went to sell it, it was so poorly run it shut down.

I read about franchising, Baskin Robbins in particular when the neighbors told me they were selling. As my husband said, he was willing to consider it if I was willing to commit to working there full time. But I wasn't.

I would suggest you only buy a business you are willing to do any job at, since there is a chance you will be doing that job at any given moment. And there will a better chance of success if you can be there daily.

Best wishes,
lafder
Topic Author
blackwater
Posts: 43
Joined: Sun Nov 24, 2013 2:17 pm

Re: Any FRANCHISE owners here?

Post by blackwater »

WOW. Thanks so much for the sobering advice. Exactly what I needed to hear. I will look elsewhere to invest my time and money.....
red5
Posts: 798
Joined: Sun Apr 01, 2012 4:42 pm

Re: Any FRANCHISE owners here?

Post by red5 »

I liked to think of franchise owners as merely employees of the higher company who just happen to put up substantial capital. It depends on the company and location but they often are not free to make many decisions on their own (prices, opening hours, etc). If your 20 year old calls in sick for the night shift guess who is likely to go in? It is not something that would even remotely interest me.
User avatar
prudent
Moderator
Posts: 9079
Joined: Fri May 20, 2011 2:50 pm

Re: Any FRANCHISE owners here?

Post by prudent »

Thread reminded me of stories I have read about Quizno's franchise owners and the terrible time they have had. Forced to buy veggies from corporate (and corporate marked up the price, not selling at cost!), when they could have gotten them cheaper at the local supermarket. And corporate giving out coupons like beads at Mardi Gras, while the franchises had to eat the entire cost. So every coupon meant a loss for the franchise owner but a profit to corporate (since they made money selling the food to the franchise).
User avatar
HardKnocker
Posts: 2063
Joined: Mon Oct 06, 2008 11:55 am
Location: New Jersey USA

Re: Any FRANCHISE owners here?

Post by HardKnocker »

Read this in an article recently:

Dunkin' Donuts, in most areas, no longer makes the donuts in the stores. They are made in a central facility and shipped to the stores.

Getting up at 3AM to make the donuts is in the past. I guess you get up to meet the delivery truck.

Dunkin' Donuts is really in the beverage business (coffee, coolata, etc.) not the donut business.

Most small businesses require you to work a lot. Having your own business in the early phases is not a 9 to 5 job. Running a Dunkin is like running a restaurant.

A good idea would be to get a part-time job at an existing Dunkin' Donuts and check it out first-hand.

In my area all the Dunkin' Donuts are owned by Indians (Asian). They keep adding locations. Two already in my town and one more slated to open in the near future within walking distance of my home.
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
camptalcott
Posts: 241
Joined: Wed Jul 23, 2014 4:45 pm
Location: Philadelphia PA

Re: Any FRANCHISE owners here?

Post by camptalcott »

My brother co-owns 2 Mcdonalds in South Carolina.
As others have said, it is hard work and long hours especially when you first start out. My brother has owned for 30+ years so he know has managers etc but it's still a 50+ hour week.

He's actually selling soon to retire.

I second the previous posters, see if you can get a job managing a fast food restaurant and see if you'd like it.
"He who dies with the most toys is still, nonetheless dead"
hicabob
Posts: 3794
Joined: Fri May 27, 2011 5:35 pm
Location: cruz

Re: Any FRANCHISE owners here?

Post by hicabob »

Never owned one but I used to rent a building next door to a building rented by a person who owned (10) BK franchises. He used that facility for his personal semi-retired mechanic to work on and store his race cars and hot rods. Very nice cars. That owner did not work the grill but I expect he had about 10 mill+ invested. Franchise owners vary so much from this guy to the person who gets 50k together and opens a subway.
skepticalobserver
Posts: 1115
Joined: Tue Jul 29, 2014 11:29 am

Re: Any FRANCHISE owners here?

Post by skepticalobserver »

This is anecdotal, but some years back I attended a securities seminar at NYU Law School. The guy next to me ran the franchise section for NY State. I asked him of all the franchises he reviewed, which ones would he recommend. His reply: not a one.

Things may have changed. However, franchise disclosure laws are weak. Given the hours you're putting in, when the numbers are run it could turn out that you're working for a modest paycheck. Of course you can't put a price on independence.

Find an attorney specializing in franchises to review the contact before signing on.
User avatar
Go Blue 99
Posts: 1118
Joined: Thu Oct 09, 2008 3:42 pm

Re: Any FRANCHISE owners here?

Post by Go Blue 99 »

A few of my wife’s family members own and run Subways. They stress a lot over employee issues, especially when someone calls in sick and they have to go fill in for them. This also puts crimps in their vacation planning.

I’ve asked them about financials and they say a decent location will make them $5k in profit per month. It’s a nice gig for them especially since they had no interest in the corporate world.
PatrickA5
Posts: 976
Joined: Mon Jul 28, 2014 1:55 pm

Re: Any FRANCHISE owners here?

Post by PatrickA5 »

I bought a couple of franchises in my younger years (sporting goods related). While the franchise fees weren't high, I managed to lose all of my money invested in both. Fortunately, there wasn't a great deal of overhead. All in, probably lost $25K. Within a couple of years, the franchisor was out of business, also.

You can find most of the really bad ones here: http://www.unhappyfranchisee.com/
dgdevil
Posts: 938
Joined: Sun Feb 20, 2011 12:42 pm

Re: Any FRANCHISE owners here?

Post by dgdevil »

blackwater wrote:WOW. Thanks so much for the sobering advice. Exactly what I needed to hear. I will look elsewhere to invest my time and money.....
I'd still attend the seminar for the free donuts. Then, maybe do some due diligence on laundromats.
User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 9:13 pm

Re: Any FRANCHISE owners here?

Post by dbCooperAir »

Will do good wrote:The happiest day was when the building was on fire and we lost our business, we got "Congratulations", "You are so lucky" from many other BR franchise owners.
I'm sorry but this is just funny for some reason.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-
stoptothink
Posts: 15368
Joined: Fri Dec 31, 2010 8:53 am

Re: Any FRANCHISE owners here?

Post by stoptothink »

Lafder wrote:I had neighbors who owned several Baskin Robbins. They were always working in the store before holidays making ice cream cakes, otherwise I never saw them working behind the counter. In general they had great managers and what seemed to be a bunch of teen employees. They made a lot of $$$ and seemed to have a fair amount of free time. They tired of the businesses and sold for hundreds of thousands.
In high school, I managed a Baskin Robbins which was owned by the grandparents of one of my best friends. The franchise was a HUGE hindrance on them. They were pretty well off (owned a lot of real estate), but they were losing money hand-over-fist with the Baskin Robbins, and had been trying to sell it as far back as I can remember. Every time they thought they had it sold, corporate would nix the deal. All of this, and yes, they were there in the middle of the night making ice cream cakes several days a week. Had quite a few long conversation with Mr. Fiet about how buying the franchise was the worst decision of his life. I know they sold it a few years ago and last time I drove past, it had gone out of business.
rjm_cali
Posts: 152
Joined: Thu Apr 10, 2014 1:52 pm

Re: Any FRANCHISE owners here?

Post by rjm_cali »

One last nail in the coffin if it was needed.

Having owned a franchise in the UK I would add one thing as I am sure it will apply here. Franchise agreements can and probably always do live on after a business goes bust. If you sign up for 10 years then you may well find the franchisor coming after you for money owing even when the business is closed and shuttered.

Fellow franchisees and I spent nearly 1M UKP taking a franchisor to High Court in the UK to break the franchise contract. As it was it broke the franchisor :sharebeer but it's not something I'd go through again.
User avatar
Will do good
Posts: 1138
Joined: Fri Feb 24, 2012 7:23 pm

Re: Any FRANCHISE owners here?

Post by Will do good »

jbmitt wrote:@ Will do good.. you didn't happen to be in Oxford, Ohio. Sounds like a similar scenario to the BR there.
No, our was in Illinois.
User avatar
Bulldawg
Posts: 536
Joined: Mon Jan 05, 2009 7:30 am
Location: Hotlanta

Re: Any FRANCHISE owners here?

Post by Bulldawg »

William4u wrote:I have a friend that owns 3 fast food franchises. Two things come to mind:

1. Analytics, analytic, analytics. It is important to run the data (and run lots of data) to get a handle on things. My friend is running numbers and interpreting numbers all the time. Pounds of buns per week per dollar. Number of people who come in for breakfast, lunch, dinner, on Tuesdays vs Fridays. What trends are there. Etc etc etc. Learn to love the math and gather all the data you can. If it can be measured in numbers, it is important.

2. Work work work. Franchise owners work ALL the time, as livesoft also mentions. 100 hour weeks are the new normal.
I have a former colleague who was very much into the numbers ( MBA- Finance and is now a CFO for hospital chain ) who nevertheless lost his shirt with a Dunkin Donut franchise; I do however know someone who's doing quite well with 4 McDonald's franchises. Although technically not a franchise, I also know several successful Chick-fil-A owner-opearators ...
" IN GOD WE TRUST " ( official motto of the United States )
LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: Any FRANCHISE owners here?

Post by LongerPrimer »

I'd give up DW ( she would get rid of me anyway), if she finds me in a DD eating 12%+ gluten, yeast raised, donuts with fresh brewed DD coffee

A west coast DD? OR or WA? I may need a PT job.
jlawrence01
Posts: 1904
Joined: Mon Feb 25, 2013 12:34 am
Location: Southern AZ

Re: Any FRANCHISE owners here?

Post by jlawrence01 »

prudent wrote:Thread reminded me of stories I have read about Quizno's franchise owners and the terrible time they have had. Forced to buy veggies from corporate (and corporate marked up the price, not selling at cost!), when they could have gotten them cheaper at the local supermarket. And corporate giving out coupons like beads at Mardi Gras, while the franchises had to eat the entire cost. So every coupon meant a loss for the franchise owner but a profit to corporate (since they made money selling the food to the franchise).
Marriott had the same issues. Many of the franchisees sued them for overcharging for hotel supplies and food.
Post Reply