Future Franchisees: Why Asking How Much You Can Make is a Dumb Question

Over the last few years, there has been this emergence of Item 19s (financial performance representations). Franchisors are working closely with franchise attorneys to figure out the best way to represent their system’s financials in order to give you, the prospective franchisee, light into how much you can make if you join their system.

I get it. Why would you ever buy a business that didn’t tell you what the potential profit would be when nothing else in life comes without definition? I believe this number should be represented, however, I don’t feel you should use it as a crutch—nor should that number be responsible for your outcome.

When you buy a franchise, yes, you are buying (hopefully) a proven model, system and brand/concept. But you are not getting a guaranteed pathway to success. Franchising is not that simple—in fact, nothing in life is. There are no unicorns.

When agreeing to pay a franchise fee, you are giving the right to drive the car. Just like a car (until Google figures it out), a car won’t work without one critical ingredient—a person.

A franchise is the same way. You get the model, the system and the brand—then, it’s up to you what happens next. It’s not the responsibility of the franchisor to magically make you money. It’s up to you.

You will also have to make key decisions as a part of the process. Where is your territory? Do you invest a little more for better real estate in hopes of a better shot at making more money long-term? Who do you hire? How much do you put into the business?

In franchising, "A" + "B" will never = "C."

When reviewing options for your next franchise opportunity, keep this in mind: Yes, the financial representation will give you a glimpse into how others in the system may be doing and some structure behind average unit volume (AUV)—but it is not a definite. You are the definite. You decide if you will be better than average, average or below average.

If I were to buy a franchise today, yes, I would want to know the numbers as a baseline for whether I thought the risk of investment was potentially worth it, but I would also take that AUV and throw it out the window. I would never pay a franchise fee or agree to pay royalty and ad fund contributions unless I was confident that I would kick average in the ass and write my own ship with the franchisor’s systems, models and brand.