I take it you are not a businessman then. There is the cost of your initial investment, and then there are annual returns on that investment. The value of the initial investment does not go away, and may in fact increase over time (ie, when you go to sell the franchise). Therefore, investing 1-2MM, gaining a $150K/year cash flow, and downstream recouping your 1-2MM when you sell is actually better than most business owners do.
Sorry, I am and if you find someone who is willing to part with 1-2MM in cash for a 150k of cashflow as an active owner and assuming all the risk of opening a business, then go for it. As I have pointed out, many times if all you want is 7-15% return on your investment you can earn this in far easier ways and passively with far less risk than being an active owner in a restaurant.
Yes, you can sell your restaurant down the line, assuming it doesn’t go out of business and may make a profit on the sale, but again that’s speculation not guaranteed, if that’s your play there are again far safer and better returns.
Seriously, what about this is so difficult to understand? If you have 1-2 Million to invest, and someone is offering you 7 to 14% return on that money to become an active owner in a restaurant, the risk isn’t worth the reward. Getting 10% on your money isn’t hard to do with far less risk.
I’ve shown from McDonald’s themselves that their typical franchisee profits between 500k and 1MM per year, yet folks still want to argue that a typical McD’s only profits 156k a year like this article tries to claim.. that’s absolutely ridiculous that anyone would think someone with 1MM to 2MM in cash would trade it for 150k per year cashflow for all the risk that owning a restaurant would entail.
Subway costs about 100-125k to get up and running and makes the average owner about 50k in profit.... So Why in the world would anyone tie up 1 -2MM to own a McD’s to make 150k in profit with them, when I could open 8 to 10 Subways for the same price or less and make 400-500k per year?
Honestly, the fact folks wish to argue this blows my mind. No competent businessman is going to part with 1MM to 2MM in cash for a 150k return per year for all the risk that comes with being the owner of a restaurant, its far far too low of a return for the risk.