Often Overlooked Benefits Of Franchise Ownership


So this is the year you are going to take the plunge into small business ownership. You have tired of the corporate shuffle, you are ready to break free … and you are considering buying a franchise.

Everybody that I work with in my franchise consulting role wants to know this really important question:

“How much am I going to be able to make?”

The answer to that question is this:

“It Depends.”

When you become a franchise owner, your income will depend on lots of factors:

1. Your market area

2. Your monthly expenses-overhead

3. Your skill set match with the business

4. Monthly royalty % due to the franchise company

5. Your monthly business loan payments

6. Your marketing and advertising costs

Now let’s say that all the stars lined up perfectly on the day that you signed your franchise agreement, and sent in your check for the upfront franchise fee. In this perfect scenario, your market area is incredible, you have a low overhead business, you have been able to find a franchise that really complements your skills, the royalty percentage collected monthly from the franchise company is lower than average, your loan payments are super reasonable, and the marketing costs are next to nothing. Sounds wonderful, huh?

Since my role is not one of “selling” the actual franchises, I cannot legally get into any type of earnings representation. Even if I could, I wouldn’t. The research process I encourage you to follow will lead you to specifics concerning your income potential. Since you are taking the risk, it is up to you to find out for yourself. You really will be able to find out how much you can expect to make by gathering facts, and by talking to individual franchisees.

(Some franchise companies disclose earning claims on the franchise offering documents you receive. Still check with their franchisees!)

Suffice to say, when it comes to your actual income, there are a lot of factors that go into it, including the benefits you can get as a small business owner.

Barbara Weltman, a leading authority on small business, took some time out from her demanding schedule to talk with me about some of the benefits of franchise/small business ownership.

“The biggest advantage (tax wise) of being a franchise / small business owner is the ability to shelter earnings. As a small business owner, each year I can set aside a substantial sum for my retirement years and get a big tax deduction now,” Barbara said. Barbara was also kind enough to offer more advantages of being a franchise/small business owner:

  • Expensing the cost of equipment purchases
  • Claiming a home office deduction for a home based business franchise
  • Writing off the cost of business travel, even though there’s some personal pleasure involved
  • Deducting car usage for travel from your office to any business destination
  • Educational expenses/business seminars

In summation, as you begin your quest this year towards franchise / small business ownership, and you start to get excited about the prospect of “owning what you do,” please remember to look at the whole picture. When it comes to income from your own business, there are advantages that you get as the owner, that you can’t get as an employee.

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Joel Libava on 2008 franchise trends About the Author: Joel Libava is President and Life Changer of Franchise Selection Specialists. He blogs at The Franchise King Blog.



Joel Libava Joel Libava is the Franchise Expert for Small Business Trends. Joel, The Franchise King®, equips today’s prospective franchise owners with time-tested, proven techniques designed to increase odds of success. He does this through one-on-one coaching, and gobs of useful content that can be found on places like Small Business Trends, SBA.Gov, and his award-winning franchise blog, The Franchise King Blog . He’s been featured in Entrepreneur® magazine, and is frequently called upon by national media outlets and publications for his no-spin insights into the world of franchising.