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Starting a Franchise: Immense Wealth Creation Potential for Veterans
Franchises are a great way to create wealth because much of the risk of your investment has been eliminated.
Franchising is big business in the United States. According to the International Franchise Association, franchises employ almost 10 million people and contribute around $625 billion to our economy.
The fast food industry is dominated by franchises, and a considerable number of hotels, full service restaurants, and retail food establishments are franchises, too. There is a reason why so many people are involved in franchising: it can create a large amount of wealth. Often the risks associated with wealth creation are high. As a veteran, you might not feel comfortable taking huge risks with your savings. Franchises help to minimize these risks.
The Basics of Wealth Creation
Wealth is a term used by economists to describe an accumulation of resources or money. To create wealth, you must take a raw material and transform it into something more valuable. For example, the raw materials for a cafe latte drink sold by a coffee shop franchise might include a paper cup, a lid, espresso, and milk. The total cost of gathering or producing these raw materials might be $1. When you sell the drink for $3, you have earned $2. By putting the raw materials for the coffee drink together, you have created wealth.
Potential for Wealth Creation in Franchises
Whole franchises create wealth in much the same way, but on a larger scale. Franchises are generally less risky businesses in which to invest than a brand new small business that you build yourself. Reducing the risk of your investment comes at a price, though. To adopt a franchise's winning wealth creation formula you must pay it a franchising fee and royalties from each sale.
Franchises offer a mutually beneficial relationship to franchisors and franchisees. Franchisees receive startup business essentials, such as a plan, training, expert backup, and a name--and franchisors can put money received from franchisees back into promoting the company. By reinvesting revenue, franchisors generate more wealth for themselves and their franchisees. Once franchisees have learned the business and earned enough money, they might decide to purchase additional second franchises, providing their parent company with additional money to use for advertising and expansion.
Wealth Creation among Established Franchises and New Franchises
Both established companies and new ones offer franchising benefits. Established companies have already done the majority of their expansion, so the potential for fast growth and huge paydays for franchisees is lower. However, established companies are already trusted parts of the American landscape. They make safer investments for franchisees more concerned about minimizing risk than maximizing wealth generation.
Newer companies are still in their expansion phase. They have lots of room to grow, and can be a great choice for bold franchisees who are prepared to take a calculated risk. Because newer companies are less well established, the chance of their failure is higher. If the company provides a valuable product or service that will retain its value and desirability over the years, though, its wealth creation potential is huge. It is up to you to decide if the company is worth the risk.
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