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- CALL 01483 273 478
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- CALL 01483 273 478
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- CALL 01483 273 478
It’s one of the first questions any potential franchise owner will have: how much money can I make?
The good news is that most franchises in the UK will provide this information, based on the level of earnings their existing franchisees are making or based on the accounts from their core business.
As a rule of thumb, a completely passive investment in a franchise model will typically earn around 10-15% over time. However, as the majority of franchises need you to invest time in addition to money, a significantly higher return can usually be expected in order to make that investment worthwhile. Higher returns are also likely to be offered where there is a greater degree of risk; perhaps a high initial outlay, or the business itself is in a relatively new or emerging market.
The ROI often depends on a franchisee’s own level of activity, drive and ambition, individual skills, and most importantly, willingness to follow the business system.
The franchisor will have spent a lot of time and money to test and hone their business system. They’ll have produced marketing tools, developed specific training programmes, installed support systems and resource, along with enlisting the advice of external experts such as accountants, lawyers and territory mapping specialists. Franchisors say if you follow the system, market the business correctly and are ambitious, driven to succeed and prepared to work hard, then based on hard data you are likely to break even in a given period.
Experts suggest looking for potential earnings of 30% against your total investment each year. Most franchise owners would expect to be achieving this level of income by their third year of operation at a minimum.
Franchising will require a significant time investment, especially when initially setting up. You will need to establish yourself within your local market and grow your customer base. Your franchisor may support you in doing this, depending on the nature of the start-up package you purchase from them. A franchise with premises, high levels of stock or a significant equipment investment will take longer to pay back than one where you’re working from home. A high-investment, high-stock franchise may take two to three years to breakeven, whereas a ‘work from home’ franchise can start making a contribution in two to three months.
Even within a franchise business, calculating the ROI or breakeven point can only be a rough guide as there are too many variables impacting the business, not least the franchisees themselves!
First you really need to consider what does ‘rich’ really mean? One person’s idea of being ‘rich’ will differ significantly to someone else’s.
Of course, it’s important that the franchise you’re investing in makes money, as well as giving you the feeling of fulfilment. Unfortunately, it simply isn’t true that running any franchise will automatically make you rich. It takes hard work, dedication and persistence.
According to Franchise Supermarket, the franchise industry contributes more than £17.2billion to the UK economy. This figure has increased by 46% over the last 10 years!
Whilst many franchises report relatively high-level sales, and/or profitability, it is important to look at the whole picture when considering a franchise investment. For example, some franchise opportunities may offer slightly higher profitability compared to other businesses, but if the initial investment is three times higher, your overall return on investment is potentially going to be lower.
The pest control industry is growing fast and franchises in the sector usually cost between £20,000 and £80,000 upfront with ongoing fees to be paid to the franchisor on a monthly basis (usually a percentage of sales).
A pest control technician, working as a sole trader or in an employed role, could expect to earn around £25,000 to £50,000 a year. However, there is far more potential to grow a higher income business as you develop your territory with a franchise model.
The expected turnover for the PGH Beegone Owner Operator franchise model in year one is £159,000 and the year one expected sales figure for a Management Owner is £319,000. In year three onwards these sales figures rise to £297,000 per year for an Owner Operator and £594,000 for a Management Owner.
Every franchise will provide detailed projections of earnings for the type of franchise arrangement you are looking for. It is often also possible to speak to existing franchisees to find out about their experiences. Use the information and data that you can find to work out your return against investment and consider how quickly you would want to see a return.
Remember to factor in the full costs of buying a franchise and the ongoing fees. It’s also worth comparing these costs against the types of costs you would incur if you were to start up a business independently.
With the right business, commitment, effort and dedication, it is possible to build a hugely profitable franchise which you can either operate for the long term – or eventually sell on. Many franchisors will also offer territory growth opportunities once you have shown you are successful in running your business in your original territory. This is an approach that is worth looking into if you are serious about high earnings.
PGH Beegone Franchising Limited
Hivegrove
Kings Court, Burrows Ln
Gomshall, Guildford
Surrey, GU5 9QE
Tel: 01483 273 478
PGH Beegone Franchising Limited Registered in England no.13147543