Why Investing In a Franchise Restaurant Can Be Better Than Other Investments

Restaurant Franchise

There are a lot of options when it comes to investing your money. You will want to pick something with a good return rate and that is steady. True, you could spend it on something extravagant or donate it somewhere, but that would mean you do not have more money to spend in the future to continue donating to a good cause. It is better to put your money into something that will keep generating an income for future use.

This is where restaurant franchising comes in to play. Unlike other investing opportunities, purchasing a franchise restaurant will give you the opportunity to make back what you put into it and then some, as well as give you room to grow.

It requires work, obviously. You cannot get something for nothing. But with the right amount of hard work at the beginning, you can find yourself reaping the profits as the years go on. A franchise is perfect for someone looking to be their own boss. You also get the opportunity to work with people. Picking your management, setting up the shop to run smoothly with minimal involvement on your part; essentially making your life easier while simultaneously increasing your profit potential. A well-run and managed business is far more likely to succeed than a neglected one.

What kind of restaurant should you invest in? Well, that is entirely up to you. Start with a well-known, established brand and your risk as an investor is greatly decreased. Or, jump aboard the train of a small but growing local chain and experience the thrill (and profit!) of seeing it grow and evolve.

Either route is less risky than, say, renting out a property and becoming a landlord. There are far too many examples of scams and tenants who destroy property. The hassle of going after people for their rent, or having to constantly replace or upgrade walls, carpets, and appliances. It is a lot of time and money to spend for a very small return rate, possibly as low as $250-500 a month, or $3,000-6,000 a year (source). In comparison, franchise restaurants can earn on average $66,000 annually.

So why not donate your money to a charity or start a charity of your own? Well that depends: Would you rather donate a chunk of change once or have the ability to donate continually over the years? The problem with the first option is that, while it may feel good to give away a large sum of money all in one go, after the money is gone, it’s gone. So if another opportunity to donate comes your way, you will not be able to give as much as you might want. There is absolutely nothing wrong with donating a large sum to a well-researched and credible charity for a good cause. But again, would it not be better for both you and the charity if your donations were able to continue to be generous over the course of several years? Not to mention the tax benefits.

The same logic applies to the idea of spending your money on yourself. Yes, you earned it, so it is entirely appropriate to treat yourself to something special as a reward. However, a fancy car requires fancy upkeep. If you want your house to stay modern and stylish, you will need to have means by which to maintain it. Think of it this way: enjoy your money for a moment or maybe a couple years, or keep enjoying it for as long as you can?

Why, specifically go for restaurant? There are other options out there for franchising opportunities. The answer to that is clear: It is hard to deny that restaurants are popular. In fact, Americans are prone to spending more money on food outside the home than in (source). There is also such a wide variety of restaurants to choose from that you really can get your pick.

As stated before, there are advantages to going big and advantages to starting small. Bigger and established chains are, of course, going to be less of a risk, while burgeoning ones are not quite as safe. Obviously, it is important to do your research and make an educated decision about what you want to go for. Planning and preparation are the best ways to avoid risk and potential failure. It is when you jump in blindly that you will truly have problems.

Another major advantage of investing in a franchise restaurant is the opportunity for growth. Once you have one location that is doing well, you can open another. More profits for you. This is particularly true with a smaller, growing chain. You can buy in when the prices are still low, and then watch as it becomes more and more popular and the cash flow is strong.

Finally, and perhaps the best news, is that franchising does not have to be a forever business for you. When you sign up to be an investor in a franchise restaurant, you sign a contract. Depending on the company, you may have some room for negotiation in that aspect. Typically these contracts are only 5 or 10 years. You may then have the choice to renew it, or not, if you do not want to continue. This does make it a faster way to earn money on your investment than a lot of other options. For example, if you purchase municipal bonds, you may have to wait as many as thirty years before you see a profit. Assuming you see much of a profit at all, depending on the situation of the economy.

There really isn’t any such thing as a get rich quick scheme when it comes to investing. It will take time and it will take work. But purchasing a franchise restaurant is arguably one of the best ideas to invest your money in.

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