How Much Do Franchises Make

You may have wanted to start a business by purchasing a franchise from a franchise company but you want to have an idea first on the exact amount that you will earn if you will actually purchase a franchise but the franchise company that you talk to only provides you with rather vague information on the figures that you will earn in case that you become their franchisee.

Usually, the franchise companies do not disclose this information to their prospects due to the fact that it is sensitive information.

Also, the Federal Trade Commission or well-known as the FTC forbids franchise companies to provide the information on how much will be earned if an individual purchases a franchise from them. If the franchise company would really like to divulge such information, it should include it in the FDD or the franchise disclosure document. This information should be accurate and should not mislead the franchisees. Given the fact that doing a business is not always a hundred percent success, the information that is written on the Franchise Disclosure Document should be accurate and validated by supporting facts.

If the franchise company provides misleading information, either intentionally or unintentionally, about the possible earnings if an individual purchases a franchise, the franchise company might face charges if the franchisee gets into trouble.

Since it is against the law for franchise companies to provide possible income projections, it may be hard for you to obtain the information that you need. But do not lose hope because there are still several ways on how you will get your hands on the information that you need. One is by asking some current franchisees of the franchise company where you plan to purchase a franchise from about their earnings. You can also review the financial statements of the franchise company itself.

Most people think that the higher the amount that they invest in a business, the higher the income would be. This is not always the case since there is not guarantee that a certain franchise will be successful or not. Although the franchise companies provide their franchisees with effective business plans, the success or failure of the business still greatly depends on the efforts that the franchisee exerts towards the business. So the next time that you consider purchasing a franchise, you should determine first if you will be able to earn more with the same amount of investment with other franchise companies.

As a general rule, you should get at least 10 to 15 percent of your investment as the ROI in order for it to be considered as effective. But a lot of franchises opt not to partake in the validation of the return of investment.


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