At The Empowered Franchisee, we see the impact of changes in the economy and the world. Big disruptions have a way of causing people to reevaluate their priorities. In those moments, the freedom and opportunity of franchising seem appealing to many people. Right now, we’re seeing more candidates interested in what we like to call “active investing”: putting money into an investment that requires ongoing involvement and decision-making on the part of the investor.
These candidates tend to be very high-net worth individuals, with a million dollars or more to invest. Many are corporate executives who are either rapidly approaching retirement. They want to make the most of this new life stage and see franchising as the way to do that.
Does this sound like you? Based on our experience with these candidates, here are some additional criteria to consider if you’re wondering whether active investing through franchising could be a successful strategy for you.
Have you saved enough for retirement?
If you’re considering active investing and are in your late 50s or older, don’t think of franchising as your retirement plan. You won’t be able to build up a nest egg quickly enough to maintain your lifestyle once you say goodbye to your day job. Instead, you should make sure your retirement is fully funded and think of franchising as more of a wealth-building strategy.
What other investments do you have?
For our smartest candidates, active investing through franchising is a diversification tactic. In addition to a retirement nest egg, many of them have investments such as private stocks or real estate. These investments tend to be low-maintenance, possibly even handled by a third party such as a broker. Franchising is a new kind of portfolio element, both from a financial and a management perspective. It’s less vulnerable to the whims of the market, and by taking an active role in the business, the owner can exercise more control over investment outcomes.
Do you have solid business experience?
Some franchises are suitable for owners with limited business experience. But if you’re planning to invest a million dollars or more, you should have significant experience leading organizations, managing operations or strategy, and managing an organizational budget. Your experience doesn’t have to be in the corporate world, though. For instance, retired military officers and former nonprofit leaders often have the skills to succeed as franchise owners.
Are you prepared to engage?
For the kind of candidate described in this post, we generally recommend executive franchise ownership. These candidates usually have enough ready cash (or investments they plan to convert to cash) to sign a multi-unit or area developer contract. As a multi-unit owner or area developer, especially if you’re close to retirement age, you won’t want to try to run every location yourself. You’ll be much more successful if you hire managers for your locations and hover up to focus on the big picture. At an average time commitment of 8-10 hours per week, executive franchise ownership is the best of both worlds. You get significant mental and interpersonal engagement, but still have time left over to golf, retire, spend time with the grandkids, or whatever else you want to do.
Now that you’ve read through the criteria, does active investing through franchising sound like the right fit for you? We’re ready to help you take the next step! Book a call with Dave or Lauri to learn more. In just 20 minutes, we can help you start down the road to your American Dream.
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