Apology- for people asking about Subway as a business

[geoffw]

Hi

I've had a few PMs recently from people asking about Subway as a business.

I'm sorry I have not responded to them.

My online time recently has been severely limited due to the work in setting up a new store.

And my opinion has also probably changed as a result of that new store.

For people who have asked- or who may wish to ask- I'd like to leave open the option of answering in public when (if) the workload settles down.

Suffice to say- I did see the business as a "Rich Dad passive investment".

That has certainly not been the case.

There's been the struggles, and there have been the rewards.

And I'm too far in the middle of it all to give an objective viewpoint.

My apologies to those who have contacted me without a response. Please be patient.

 

[Francesca Chaki]

Hi Geoff

I actually went through the entire process to purchase a Boost Juice. I had completed all the due diligence and just before signing on the line... i realised I was using a heap of equity to buy myself an income...... !! I was already earning the same amount of income that the store would have generated without using my precious equity and double my valuable time.

Also the 250K to start the business was all depreciating assets so after 7 years I would have had nothing except "good will".... which if you ask the banks is worth nothing.

Looking back now, I am glad that I didnt go through with it.

I think if people want to earn more cash flow, you can 1. teach yourself to trade 2. affiliate internet marketing or 3. small scale developments ...

Does anyone else have any cash flow ideas??

The Rich Dad strategy is to buy businesses that do not need you there working but employing others. This frees up your time so you can continue thinking and investing more.

 

[Sunfish]

Quite a reasonable attitude IMHO.

I never mention my line of biz any more because it is one that prompts questions, which I used to try to answer but it becomes tiresome when you realise that they are just tyre-kickers and often don't even give thanks.

You are entitled to your privacy.

 

[tubs]

The question is why purchase a franchise?

There's two parts to a franchise (or any business) purchase. One is the physical tangible bit, which is like the equipment, set up etc. The other bit is the brandname/goodwill etc.

Instead of paying the second bit, I think you may well be better off spending that money learning how to market your business, and using it to pay for carefully planned promotions to get customers into your store. Then if you do your job, they'll come back, and voila, there's your business. It'll cost you much less and you're not limited by the restrictions placed on you by the franchise.

And Francesca, you were probably right. You were probably just buying yourself a job, especially when you dont have the scope within the franchise to do what you want.

It never ceases to amaze me that people will pay Jims Mowing lots of money to set them up and find them lawnmowing jobs, (plus commission) when this side of the business could be done so easily if they spent a bit of time and money working out how to do it themselves.

 

[kingchevy]

I think I know what geoff is going through I am struggling the same in my business with little or no time to myself and I would be objective on telling people if a business is a good idea having a second chance I would have just got the best paying job I could find in the mining industry that is about 100,000-130,000 for me and just bought more property and shares etc I would be a very richer person right now but in saying that I enjoy the challenge of a business and what I have achieved in the last 2 years is amazing.

 

[lizzie]

Instead of paying the second bit, I think you may well be better off spending that money learning how to market your business, and using it to pay for carefully planned promotions to get customers into your store.

i disagree - it's all about name recognition.

when travelling, even tho i usually can't stand the stuff, i'll stop at macdonalds because i know the toilets are clean, what is on the menu and exactly what i'll be getting when i order. not like when i pick a no-name place at random and the food is not as expected - sometimes better, often not.

i imagine subway is the same - in demand because it is familiar to purchasers.

(not that i am in any way comparing the high quality of subway to the dubious quality of macdonalds food).

 

[steveadl]

The question is why purchase a franchise?

I agree and disagree.

I believe a franchise name can be valuable when it comes to food systems. I would rather go to a Subway than the local sandwhich shop, and I would rather go to McDonalds/HJ's etc. than the local burger shop. With food it comes down to integrity, consistency and familiarity. As Lizzie said - with food, you want to know exactly what you are getting.

There will of course be many exceptions to the rule, but for the most part - I don't believe franchise systems are a good proposition for the business person. Especially if it is a retail business on selling well known products.

Franchises are there for the people who want the hand holding that comes with a franchise - but this still doesn't necessarily guarantee success. If you need your hand held and want to be spoon fed everything, and have someone to ring every 20mins when a question comes up - you probably need to ask yourself if you have any business running a business, so to speak.

I have a successful business that is going from strength to strength based mainly on my own efforts (and partly because I am in an annoying situation ). If I were to rip my signs down tomorrow, pay a $hit load of cash and put up the signs of the well known franchise brand - my business would not do any better (in fact in my case, it would do worse).

Remember also, franchises can also come with bad connotations and stigma that the franchiser isn't exactly going to boast about!

If a consumer retail business (for example) has a good position, offers a desired product, and is run well by a person who has knowledge and interest in that particular area, it shouldn't need to have a brand name. I acknowledge that it will take longer at the start up stage to get people to realise what you are selling, but in general the business should still succeed.

For example, if you walk through a Westfield tomorrow and see a well set up shop with the latest brand new DVD's for sale at a good price - would you care whether the sign out front says 'EzyDVD' or 'Bob's Bargain DVD's'? Yes, you'll recognise the EzyDVD brand name, but once you've actually gone into the shop and realised Bob's place is very good - do you care who sells you Season 11 of The Simpsons?