Are Franchises Still a Good Investment?
The investment world has been less than usually stable for the past several years. Many traditionally sound investments, such as real estate, have become much more volatile than they historically have been. Other investment mediums, such as bonds and certificates of deposit, have remained safe, but become so low in return that they are hardly worth investing in. Many financiers looking for good investment opportunities are unsure whether or not franchise operations are still a good investment. In this brief article, we will take a look at the investment potential of franchises in the modern economy.
Initial Investment
The initial investment is and has always been the major drawback to investing in a franchise. Generally speaking, a franchise investor needs anywhere from $25,000 to $100,000 to successfully acquire a franchise. This, of course, makes the inithttps://intern.textbroker.com/a/openorder-write-submit.phpial risk quite high. However, this should not dissuade investors from looking at franchises as a very serious investment opportunity. In fact, given the potential for profit, this is quite a reasonable entry point. Compared to an investment in real estate, for example, even a $100,000 franchise will come in at the lower end of the price range that would normally be required to purchase a property to rent out or resell. In addition, it should be noted that business loans for franchises are commonly given by financial institutions, and it is not therefore necessary to have such a sum immediately on hand.
Profit Potential
Cutting to the heart of the matter, the potential for profit in owning a franchise is extremely large given the initial investment required. A broad spectrum survey conducted by the Franchise Business Review, an independent research group, found that an average franchise will turn its owner a profit of roughly $66,000 annually. When compared to the initial investment, this is an enormous return. Franchises are also an excellent investment in the current improving economy, as more money is being spent at restaurants and stores.
Conclusion
Despite the changing times and relatively high initial investment, franchises are still an excellent opportunity for investors. Given the average profit potential of over $60,000 annually, franchises offer investors a much higher return rate than stocks or real estate. While franchises do not always stay in business indefinitely, the profit potential more than makes up for it. Finding a less competitive market for your franchise will also help to increase its chances of success.
Jonah Engler is a finance guru who resides in NYC. He is a former stock broker and an investor.