Franchise restaurants may offer less risk than a restaurant started from scratch, since they follow a formula that?s already been tested. But, as Paul Sullivan writes this week in his Wealth Matters column, franchise investors need a bit of luck to succeed.
They also need to be able to invest a sizable amount of money. A McDonald?s, at the high end, may require $1 million to $2 million in preopening costs.
Successful franchisees told Paul that they had also learned the importance of paying attention to managing the people on the front lines of the business. As Steve Caldiera, chief executive of the trade group International Franchise Association, said, ?You?re only as good as the people running the business.?
The column is the fourth in Paul?s series on passion investing. But it?s fair to say that the others in the series, on investing in films, race horses and restaurants, are more the stuff of passion. But then again, operating a successful franchise can be far more lucrative than the others.
Have you ever invested in a franchise? Do you have advice for anyone considering getting in? Tell us about your experience in the comments section below.
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