As 2024 begins, many people are thinking about their plans for the coming year. New year’s resolutions are common, of course, but research shows that they’re not very effective. Specific, realistic goals and concrete plans to achieve them will win out any day of the week. If you’re like many of the candidates I work with, you’d probably like to increase your financial security this year. That’s a wise choice, given the unprecedented upheaval in our economy over the last few years. But how do you make it happen?
You could go for a conventional option, like investing in real estate or increasing your retirement contributions. From my perspective as an experienced multi-unit franchise owner, however, franchising is an ideal way to achieve financial security. It has numerous benefits and a level of flexibility you won’t get with many other wealth-building options, including conventional entrepreneurship.
Franchising has options for all involvement levels.
Good news: whether you’re looking for a day job or a side hustle, franchising will work for you. Let’s look at day-job options first. These are a good path to financial security if you still want or need to work full time but are looking for a change. Maybe you’re working in a failing industry and want to get out before it all crashes down around you, or you’ve just been laid off (or are worried you’re about to be, whether because of your age or some other reason). Perhaps you’re in a strong industry, but you feel you’ve tapped out on advancement or income potential. Maybe you have challenges or obligations that mean you can’t spend 40 hours per week in an office downtown. Or maybe you’re just tired of the corporate rat race and ready to do something more fulfilling.
Franchising can provide the day job you need to earn a steady, growing income that improves your family’s situation. Businesses are available in numerous growth industries (even in a recession), and your income is limited only by how much you want to work. Age is an asset, not a liability, since experienced businesspeople with a proven track record of success are more likely to pass a franchisor’s awarding process. And if you’re moving around the country with a military spouse, caring for small children or aging parents, or need flexibility for some other reason, a home-based franchise can meet your needs.
On the flip side, maybe you’re happy in your day job and just want to add an income stream to boost your family’s financial security. Franchising works for that situation, too, even if you can’t manage full-time involvement. In fact, for an experienced executive, running a franchise on the side isn’t much different than adding a new project to your portfolio at work. Just look for an executive-model business, hire the people you need to run it for you, and provide strategic oversight to keep things on track. Build your franchise until you’re ready to retire, then sell it to pad your nest egg, or hold onto it as a way to keep yourself occupied in your golden years.
Franchising can provide active or passive income – or both.
Active income is income you earn through regular, full- or part-time work: in essence, a paycheck. But that paycheck doesn’t have to come from someone else. As a franchise owner-operator, you can write your own paycheck. Though you’ll need another way to pay your bills during the launch period, you can quickly reach a point where you’re drawing a healthy salary from your business. And thanks to the income-earning potential of franchising, that salary is likely to surpass what you could have made in the corporate world.
If you go a different route and become an executive franchise owner, your franchise can provide passive income: “mailbox money,” some people like to call it. This is regular income that comes to you with little to no hands-on effort on your part. Think of compounding returns on mutual funds, or rent checks from an investment property. While executive franchise owners do have to invest some time in the business, just 8-10 hours a week is usually all that’s necessary to produce significant income. The financial return is typically way out of proportion to the effort invested.
Want both active and passive income? Franchising can provide that, too, especially if you start out as a single-unit owner-operator. Get your business up and running, then start expanding. You can continue to work full-time at one location, creating active income, while hired managers run your additional locations and generate passive income in the form of profits. Use those profits to increase your salary without significant extra work, or invest them back into the business to make it grown even more.
Franchising comes with major support.
This is one of the biggest reasons behind franchising’s superiority as a tool for creating financial security. Franchise support generally comes in two primary forms. First, you get a proven business system developed by the franchisor. This eliminates the need for trial and error in figuring out product-market fit, pricing, operational efficiencies, and other elements that are crucial to business success. Some franchisors also provide ongoing training, on-site consultations, marketing and sales support, and/or customer service call centers to supplement the initial training and documentation on the business system.
Second, you get access to a network of fellow franchise owners. Networks are often large and highly active, providing mentoring and other support for members. Fellow franchisees can be a key source of vendor recommendations, employee referrals, actionable business advice, and just general encouragement and support.
Both of these sources of support add to your financial security by making your business more stable. With a proven business model and helpful peers to back you up, your long-term success is more certain.
In closing, I’ll say here what I’ve said to many of the candidates I worked with in 2023: don’t go into 2024 single-threaded. Start making concrete plans to set up multiple income streams through franchising, so you’ll be better equipped to take care of your family, achieve your goals, and weather any storms that come your way.
And don’t wait. Depending on the type of franchise you select, the process usually takes 6-18 months from the time of initial consultation to having a fully operational business. That timeline also assumes you’re working with a consultant, which shortens the process (and is completely free!). If you have to wade through all the available options and approach franchisors on your own, expect a longer journey. Book some time with me or my co-consultant Lauri, and we can get you off and running to a successful 2024!
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