For people who are interested in running their own businesses but are concerned about the risks that they will be taking on in the process, there is the option of becoming a franchisee. In short, a franchisee benefits by securing a pre-established brand as well as a pre-established way of running a revenue-earning operation, thus eliminating a significant percentage of the risk of opening a new business. However, a franchisee is expected to pay a portion of their revenues to the franchisor, which is the price paid for the support that they will continue to receive so long as they continue to run their business. Based on this, it is clear that while becoming a franchisee isn't exactly 100 percent positive in nature, it has more than enough upsides to make it suitable for a wide range of people out there.
With that said, interested individuals need to be careful about choosing the right franchise. After all, there are a lot of franchisors out there, meaning that making the right choice can make their running of their revenue-earning operations that much easier. One candidate that interested individuals might want to look into is Five Guys, which is a chain of burger restaurants started up by Jerry Murrell and his five sons. Said chain is simple and straightforward in nature, consisting of burger restaurants that specialize in serving outstanding burgers and fries sooner rather than later. There are those who might consider this to be too simple and too straightforward in nature, but focusing on core competencies is a proven strategy that has helped a lot of businesses succeed in their chosen fields. In fact, considering that Five Guys experienced close to 800 percent growth between 2006 and 2012, it isn't unreasonable to say that its strategy has more than paid off.
What Do You Need to Open a Five Guys Franchise?
Wealth-wise, interested individuals should have at least $500,000 in net worth if they want to be able to meet Five Guys's requirements for becoming one of their franchisees. Moreover, they will need to have at least $150,000 of that net worth in liquid cash, which makes sense because illiquid assets can't be used for the benefit of businesses in a timely manner without a high chance of getting less than fair market value for them. Cost-wise, interested individuals should know that there is an upfront franchise fee of $25,000, which is more or less in line with the franchise fees of other franchisors in similar markets. Of course, there are royalties that will have to be paid out of the revenues as well, which are set at 6 percent.
Having said this, interested individuals should remember that they will need much more than just these costs to open a Five Guys franchise. For example, running a successful business calls for a wide range of skills that include but are not limited to bookkeeping, inventory management, and personnel management. As a result, interested individuals have the best chances of success if they are already familiar with running some kind of fast food restaurant, though if they are feeling inadequate, they should remember that one of the biggest upsides that come with being a franchisee is the support that they can expect from the franchisor to help them get ready. With that said, interested individuals should also be prepared to spend a significant amount of money to secure a property for their business as well as all of the short-term and long-term assets needed to get that property ready for their business. Suffice to say that this is something that can see a fair amount of variation from real estate market to market, though interested individuals can almost certainly expect it to be rather expensive. After all, people have to spend money if they want to earn money.
Ultimately, while becoming a Five Guys franchisee is a more reliable method for interested individuals to become successful business owners, they need to remember that opening a new business is still a high-risk, high-reward prospect. Yes, they can count on getting support from their franchisor, which will prove invaluable in getting their business up and running. However, the more they prepare as well as the more resources that they have on hand, the better still that their chances will prove to be.
Written by Garrett Parker
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