Hey everybody,

I saw a business broker’s post recently about a scenario he sees all the time:

He’s a smart guy, and he had some good advice: don't assume you can run a franchise as a side hustle, no matter how easy it sounds. (I’ve written on side hustles before.)

That’s good advice before you get started.

But what if you’re already in, and stuck now?

It’s a tough spot. Let’s look at your options.

I’ve seen this play out with someone who invested under $200K into his franchise. 

He was making $300K at his prior job. His franchise is doing about $50K a year. He's been running it full-time for years, trying to grind it into shape.

I’ve been telling him for years: always factor in your opportunity cost. Is “being your own boss” worth a quarter million dollars a year? 

So don’t just look at what your franchise is making. 

Look at what you’re giving up.

When you're stuck in an underperforming franchise, you generally have three moves:

Put a manager in place and go earn elsewhere. Yes, your standards for business performance drop. A manager probably won't run it as well as you would. But if the business can survive at "mediocre" and you can go make $300K again, that's a net win. You stop the bleeding on opportunity cost while the business keeps the lights on.

Open your heart to seller financing. The more flexible you are on terms, the more likely someone will take this off your hands. A lot of the time, your seller finance payments can cover your loan. You're still holding financial risk, but someone else takes the operational risk - and frankly, they might do better than you in that seat.

Go all in and build it to what it needs to be. Sometimes the answer is to stop half-assing it. Fear tends can put a heavy foot on the brake pedal. Ask yourself if you’re really doing everything you can to make it work. Because if you can fix what’s broken and build things up, then you don’t need a broker anymore — either you’re out of the woods and can choose to stick around, or another franchisee in the system will come to you.

Before you ever sign a franchise agreement, you should have a clear picture of how you'd get out if things don't go as planned.

That means picking a brand where other franchisees are doing well. It’s not because it validates the model (thought it does). It’s because successful franchisees are your future buyers. So if the system is healthy and you're the one struggling, that's actually good news. It means there's demand for your location. Someone will buy it.

But if the whole system is struggling? Nobody's buying. You're stuck calling a business broker who's going to say, “Good luck.”

One final note: I’ve seen a lot of people get stuck trying to find the perfect franchise.

The truth is, the perfect franchise doesn’t exist. It’s about finding the imperfections that are right for you. (More on that here.)

If you want help thinking through it all, book a call.

Talk soon, 

Connor