Is Starting a Franchise Business a Way to Make a Living?

Does starting a franchise business mean you’re going to have to quit your day job? unnecessary. The advantage of franchise ownership is that once you learn how to start a franchise business, you should be able to get started easily. 

Which begs the obvious question: How much does a franchise owner make in a year?

While the amount varies by industry and company, most franchisees make around $80,000. However, many factors can affect how easy or difficult it is for you to live a sustainable life with a franchise.

How Do I Earn Money from a Franchise?

Each franchise makes money directly from the profits generated by the franchise itself. This means that after subtracting your debt and overhead from your gross profit, you can take your salary from the remaining money.

This means that when your franchise makes money, you make money. But it also means that your overhead costs will affect your bottom line. You need to learn how to start a franchise to balance these overhead costs with high profits in sales and service.

What Costs Impact My Franchise Earnings Potential?

Overhead costs always affect a franchisee’s salary. How much are these fees? 

They can vary by company and industry, but common costs include:

• Franchise Fee
• Monthly royalties
• commercial real estate
• business insurance
• Payroll
• Supplies, Inventory, and Equipment
• tax

While some of these costs are one-time expenses (for example, the initial franchise fee), the franchisee will still be responsible for repaying any loans they took out to start the business.

But don’t forget that these costs are usually in your favor. 

The fees you pay to the franchisor will be backed by strong industry support. Your franchisor can often provide training to starting a franchise business and achieve greater success than if you were to start your own business.

How Much Do Franchise Owners Make a Year?

Taking these factors into consideration, how much can a franchisee make in a year? The national average is $80,000 but varies by company and industry. The most successful franchisees make more money by going the extra mile and opening multiple franchise stores in their area.

Other franchisees can make a decent living by converting their home offices into franchise locations. That said, you can run a business like a travel planning agency or an on-site photography service out of your home, minimizing administrative costs and simplifying the start-up process.

How Long Will It Take to Earn a Living from a Franchise?

One of the great things about franchises is that they provide strong brand recognition. Customers will instantly connect to the franchisee’s brand and instantly understand what they can expect from your menu, service, and overall customer experience.

In other words, instead of waiting for your business to grow, you have a built-in customer base from day one. This means you won’t have a delay period until you can expect to earn a meaningful salary.

How to Evaluate the Profitability of a Franchise

The profit potential of a franchise is difficult to predict on your own. There are several ways you can evaluate a franchise before signing on.

Read the Franchise Disclosure Document

The franchisor must file a Franchise Disclosure Document or FDD. The FDD will provide you with the company’s history, litigation records, and most importantly, its financial performance. 

This won’t tell you what salary to expect, at least not directly, but it can give you an idea of how successful the company has been in the past.

Ask the Franchisor

Sometimes the direct approach works best. In your initial interview, simply ask, “How much does a franchise owner make in a year?” The franchisor may be able to provide specific data on the profitability potential of other franchises in your area or a similar operating area.

Talk to other franchisees.

Talking to other franchisees may give you a more complete picture of a particular company’s earning potential. While you may not ask them about their salary directly, you can determine if other franchise owners are making a living. 

If any franchisee is in a hurry to leave the company, it could be a sign that they are not earning enough.

Start your franchise research today.

The best way to research franchises is to find the one closest to you. At Insurance Franchise, we can help you do just that. 

Use our search tool to find the best franchises to own in Texas and start your journey as your own business owner.