What does financial freedom mean to you? It’s a subjective term, one that can mean different things to different people. But in its most basic sense, you might think of it as freedom from worry. If you have financial freedom, it’s more likely that you sleep through the night, without concern over how you’ll pay the bills, send your kids to college, or keep the engine in your old vehicle turning over until you can afford car payments.
Achieving financial freedom with franchising is an option worth exploring. Franchises like Freeway Insurance can change your life for the better. Here’s what you need to know about financial independence through franchising.
Understanding Financial Freedom Through Business Ownership
It’s all about you. That’s just one advantage of owning your own business. Your fate is in your hands. And that’s one of the keys to building wealth through franchising.
As an employee, you might see the mistakes that management is making, but be unable to do anything about them. You feel a sense of insecurity and frustration as you see the company making the wrong moves. Perhaps your salary is frozen because “raises just aren’t in the budget this year.”
That doesn’t mean you won’t make your own mistakes as a business owner. You’ll make plenty — but you also make the decisions that will boost sales, cut expenses, or otherwise improve your bottom line.
Why Franchising vs. Starting from Scratch?
Start with a brief definition. A business franchise is the ownership of a business that’s patterned after an existing corporation that has succeeded. When you buy the franchise, you buy the name of the company, its logo and design, the products or services they market, and their unique ways of doing business.
The strategy in buying a franchise is that you instantly adopt the brand familiarity and reputation of the franchisor. If you own a Dunkin’ franchise, your customers trust that your doughnuts and coffee will be just as satisfying as the Dunkin’ products they’ve sampled in the past at different locations all across the country.
You also have franchisor coaches and mentors who can answer your questions and help you overcome obstacles they have already encountered hundreds of times.
Without a Dunkin’ brand, all you have is Joe’s Doughnuts — or something like that. You must design and buy a logo, run a pricey ad campaign to get people to know you, and make plenty of mistakes because you’ve got no voice of experience in your corner.
The Franchise Wealth-Building Formula
You might think of “wealth-building” as being the ultimate stage of financial freedom. You’re not only making enough money that the bills aren’t piling up, but you’re actually setting money aside and growing wealth.
One way the franchising model enables you to build wealth is through the concept of leveraging other people’s time, or OPT. Back to the idea of Joe’s Doughnuts, Joe has to do everything from scratch to build his business from the ground up.
Franchisees, on the other hand, leverage the time experts have already invested in developing a business model, adopting a cluster of effective products or services, and creating a company name, logo, and successful marketing campaigns. They’ve already put in the time and figured out what works and what doesn’t.
Scalability is another winning principle of franchising. Once you’ve mastered one unit, you might consider advancing to multi-unit franchise ownership. Many franchisors allow their franchisees to open successive units, and some even encourage it. In this way, you can multiply the success you’ve had with your original location as your business grows.
For greater financial independence in franchising, look for a franchise that offers recurring revenue. This is a model of compensation in which you receive commissions or some form of compensation long after the original sale. Consider, for instance, the revenue an insurance agent receives from selling a life insurance policy. The policyholder might pay premiums for several decades, and the agent gets commissions on those payments even after retirement.
Speaking of retirement, consider the sale of your franchise business as your ultimate retirement plan. Just make sure that your business can be sold and successfully operated by the new owners, and that the company will grow over time and maximize its profitability.
Put it all together, and you can see how you can work toward achieving financial freedom with franchising.
Types of Franchises for Financial Freedom
Franchising, as a business model, can lead to financial success. If you pattern your business after a successful franchisor, you have brands people recognize and accept, and your franchisor provides comprehensive training and ongoing support, you should find success.
However, some franchise investment strategies and types of franchisors might get you there quicker and more assuredly than others. Some have higher profit margins and better earnings potential than others. Consider the following franchise models of operation.
Semi-Absentee Ownership Models
Do you have to be there every day? Do you have to work 70 or 80 hours a week to make your business successful? Do you want to put that kind of time into your franchise operation?
If you have a business in which you can train and motivate employees to work without your constant supervision, you can take time off. It might even get to the point where it’s a semi-retirement business.
Consider, for instance, an insurance agency. Once you get to the point where you can hire and train talented agents, they’ll be self-starters because their compensation will be determined by the clients they sign and the commission checks they generate.
Recession-Resistant Franchises
When the economy turns, Americans avoid spending what they don’t have to. For instance, they must always have food, but they don’t have to eat in expensive restaurants or in budget-nibbling fast-food franchises.
Try choosing a franchise that’s not so easy for your customers to avoid when the economy sours. Once again, consider the insurance business. If you want to drive a car, you must have car insurance. You must have homeowners coverage if you’re buying a home. Some property managers won’t lease an apartment unless prospective tenants can show that they have renters’ insurance.
Healthcare, child care, and commercial cleaning are other examples of franchise businesses that are more resistant to recessions.
Passive Income Franchises
If you will continue to receive revenue from your business even when you’re not working at it, that’s known as franchise passive income. You got an example of this regarding life insurance policies, which can pay commission dividends for decades.
A homeowner’s insurance policy might pay for a decade or longer. Even a car insurance policy might generate commission checks for five or six years.
If you own a passive income franchise, you can count on getting a paycheck even during bad financial times because of the sales you generated when times were better. This means heightened financial security and peace of mind.
The Path From Employee to Franchise Owner
When you take the big step to independence, your life changes. As the owner of a business, you’re the boss, and the decisions are yours to make. Best of all, you’re now on the road to financial freedom with franchising.
But how do you get there? Consider these steps toward making the dream a reality.
Phase 1: Building Your Initial Savings Platform
How will you buy your new business and operate it before it turns a profit? Where’s the money coming from?
Do you have investors lined up? An existing relationship with a lender? Will your life savings finance your operation? It might be a combination of several resources and financing strategies, but figure it out before you get to the next stage.
Phase 2: Choose Your First Franchise
This is where the fun starts. What are your talents, skills, passions, and experiences? What do you want to do with your life?
Now go online and start researching opportunities. Most franchise websites are easily identifiable, and it’s easy to reach out to a franchise representative if they’re actively looking to sell franchises. Ask about cost, territories, timelines, and what you need to do to launch your business.
If you get serious about an opportunity, ask to see the company’s Franchise Disclosure Document, or FDD. This is the detailed opportunity, and all franchisors must have this document in writing.
Read it over carefully, and then let your advisors take a look. If they see red flags, take it seriously. And if there are details you’d like to see changed, bring them up to the franchise rep and see what happens.
Phase 3: Scaling Up to Multiple Units
During the research process, ensure there’s an opportunity to open additional units. That’s the road to true wealth. After all, you can use what you’ve learned in successfully running one location to scale up and earn additional revenue.
Phase 4: True Financial Freedom
This is where you put it all together. You get to the point where you can make passive income, hire good management, and start planning your exit strategy.
Will you sell your successful company to fund your retirement? Or step back a bit while managing your business from afar. Perhaps from white-sand beaches.
The point is, the choice is yours. If your franchise opportunity is handled right, you now hold a very valuable business and can do with it what you want. You’ve achieved financial freedom in the truest sense.
