Build, Buy, or Franchise?

Build, Buy, or Franchise?

Had your Subway yet, today?

The original co-founder of the Subway sandwich chain, Peter Buck, died earlier this month at age 90. He was a 34-year-old nuclear scientist (and expert in subway sandwiches, apparently) when, in 1965, he loaned $1,000 to a family friend, 17-year-old college  student, Fred DeLuca, to start a sandwich shop called Pete’s Super Submarines in Bridgeport, Connecticut. Today, Subway is the largest restaurant chain in the world with about 20,000 restaurants in the U.S. and 40,000 worldwide, and Buck’s net worth has been estimated at almost $2 billion.

Sometimes those loans to a friend turn out to be good investment. And you don’t have to be a nuclear scientist to make good choices.

What’s a good franchise investment today? Would you like to own and manage a fast- food franchise or buy shares in the franchisor and watch your investment grow? Be an active or passive investor? Recommendations by the experts – business brokers and financial advisors – are not very helpful. They’re always working to promote their own choices and are often biased by their own self interest. You’ll have to do your own research. Like Buck and DeLuca, visit a lot of sandwich shops and then eat your own cooking before you test it on customers.

There are lots of franchise opportunities, not just fast-food and coffee shops, but also personal and professional service companies from body-shops to fitness centres. I’ve always suggested to entrepreneurs that the choices for starting a business are to build, buy or rent. The rental option is to become a franchisee and pay to use the established branding and proven business model of the franchisor. You lose the freedom to make your own choices, which is the appeal that motivates most entrepreneurs, but you reduce the risks of making bad choices and unsuccessful investment decisions. Maybe get the experience with a franchise while you’re still a college student and learn how to reduce the risks and improve the results before you start.

For passive investing, there are many currently recommended stocks in the franchise and fast-food sector. But again, you should do your own research and make your own choices.

That’s the essence of successful entrepreneurship, confident and competent decision-making.

Be better. Do better.

Del Chatterson, Your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

 Read more Blog posts at: LearningEntrepreneurship Blogs


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