Businesss, Franchising, Net Worth, Personal Finance

Own A Franchised Business?

If I am not going to build a real estate empire, then should I own a franchised business?

Food and fitness have always been my passion.  I currently work in the restaurant industry and I spend close to ten hours a week in exercising to keep myself in shape. It is crucial to keep myself healthy in order to reach my goals.

Owning a fitness or gym franchise seem to make more sense due to its low overhead and high margins.    Owning a specialty fitness gym such as Moksha Yoga is even better because you could charge customers more money.   Typical gyms like Anytime Fitness and Planet Fitness, on the other hand, require more membership sales in order to make a profit because they charge customers less.

There is this franchised speciality fitness gym I am interested in.   The minimum financial requirement for this franchise is $150,000 in liquid assets and $500,000 net worth.

I am confident that I will be able to own this franchise because I will meet the minimum financial requirement:

Screen Shot 2017-07-28 at 8.23.53 AM

As of my assets, $550,000 is the estimated appraised value of my condo in 2022.  In addition, the $150,000 of liquid assets will be from my parents ($100,000), my savings ($25200 – $700 of monthly saving while I live in my condo) and my investment in stocks ($24800).

As of my liabilities, $139,987 would be the amount of mortgage left for my condo and $4,000 would be my personal line of credit that I use to invest in the stock market.  That comes to a total net work of $556,013.

Although this fitness franchise has low overhead and high margins, the company’s website do not mention about the franchise fee and the royalties that the franchisee is responsible for.  I worry that my margin would be eaten up by these fees.

On the other hand, food franchise has high overhead and low margins.   Moreover, you have to be very commited into your business because there are always problems regarding staff, restaurant and customers.  However, profit can still be made right if you know what you are doing.

The franchise that I am interested require $233,000 of cash or liquid asset (unencumbered) and the estimated total capital cost (built out) is $573,000. Furthermore, the franchise fee is $55,000 and 6% of sales goes to royalities and advertising.

Although restaurant business has a lower margin than the fitness business, people still has to dine out during a economic downturn.  People often cancel their gym membership just to have enough money for food.

Whether I am going to build a real estate empire or own a franchised business, I am confident I will reach a net worth of..

“SIX MILLION DOLLARS!”

In addition, I could potentially make more money because I have valuable knowledge to teach other people how to do what I did.

Lastly, I want to thank the people who read and follow my blog.  THANK YOU SO MUCH! I will continue to produce good content for you guys.  Catch you in a flip!

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