Tweet

Passive Income in a Franchise

Written by: Andrew Edwards

Article Overview: For me the holy grail of any business venture is to create a passive income stream. What is the point of earning money, that one has to expend huge amounts of time and effort to achieve? This is even more important in a franchise. What I have found helpful is to make passive income a conscious goal that, in turn makes other day to day decisions easier. I ask myself daily, "Does what I am doing help me reach my goal of growing my passive income, yes or no?"

Passive Income in a Franchise

In my franchise network, I found that the business was often side tracked by customers and demands that although they made some money, they used lots of time and resources, for no added gain. The real gain I was looking for was to increase the passive income of the business.

Only once the business owner sets this as a goal, will the business truly make the necessary adjustments needed to tackle the most important tasks of producing long term sustainable passive income streams.

To me now this sounds obvious but in the beginning of my learning process, of launching a business, this was not at all clear. Only once I understood the importance of having money flowing into the business that does not require huge effort to produce, did I see the massive benefits to the business. Once this became clear then it became easier to make the system changes to make this a reality.

The staff members within the business, largely could not see any difference and seem blissfully unaware of the benefits of passive income. This is largely due to the fact, that as employees they are trading their time for money and have never earned any passive income of any significance, so to them it is not an issue. This is why, if, as a business owner, you come from a corporate background, it is natural to make the same mistake, of not valuing passive income.

If you are reading this article and you have not got a clue about what I am writing about, and you have no idea about what "passive income" is then you are no doubt stuck in the same mindset that I was, in the beginning. For me a simple definition of Passive Income, is money that is produced for very little time or effort. Real Estate for example can produce a rental income that is largely passive and requires very little effort.

In my business we have 3 main areas: manufacture, rental and franchising. We sell rental items from our factory to our franchise network, that produce a growing passive income stream back to the main business. My mistake had been using lots of my factories time and resources to produce rental items for competitors and other customers, non of which had the same passive income flowing back to the company. The difference is subtle but the results long term very different.

Your business may not have the same opportunities for creating passive income, but if one opens ones mind to the possibilities of seeing something new, them it is quite possible that new opportunities and changes in focus can produce new results.

Related Articles
  Passive Income Defined
  Design Days
  Ways To Earn Passive Online Income In MLM
  Automated Home Business: Who Automates Them?
  Passive Income Opportunities – How to Make them WORK?

Article Tags:



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: What are your success criteria? - [quote="DwayneGarrett":1igrdgib]Out of curiousity, what has to be present for you to know that your business is a success? The top three things for me are: 1. Maintaining a 6 figure income year in and year out. 2. Creating and promoting my own products. 3. Income not solely dependent upon my personal effort. How about yours?[/quote:1igrdgib] I would have to say mine were: 1. Monthly Residual Income that exceeds all expenses by 110% 2. Free time to create and promote my own products (relies on #1) 3. 5% of all revenues generated by my team going to feed starving kids Now that is "feel good work".


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Stress: What Causes It and How To Deal With It

Sales Courage and Resilience

BUILDING A HIGH PERFORMING TEAM

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.