Anyone have a Franchise?

[Mike Bereck]

I know BP is mostly for RE, but does anyone here also invest in any franchises?  Seems like it could be as profitable if not more as a Re investment.  Also, could be a good way to diversify your investments and not put all of your eggs into one basket to say.    

[Don Konipol]

@Ben Patel

Old thread is right, but why not? I can only give you my experience. Between 1986 and 2000 I stated and built a small chain of 8 franchised locations in the automotive repair industry. I rented the property in5 of the locations and owned the real estate in three. I decided to do an analysis of where my profits came from, and where my time was spent. Over 75% of profits accrued from owning the real estate, yet the real estate accounted for less then 5% of my time. So in 2000 I sold all the businesses, and went into real property investment as a full time career. Since I have increased my net worth by 700%.

One takeaway is that for me personally, real estate investing is a much better fit than managing a small business. Interestingly, some of the tenants in properties I own or own a piece of are fast food operators. Seems like they are always struggling with high operating costs, high employee turnover, huge time commitments, large monthly payments on bank loans, and high lease payments, as well as increased competition keeping prices low. And if they are successful in raising revenues, our leases call for us to get a small percentage of the increased revenue. I work less, earn more, build more significant long term wealth, and enjoy what I do more investing in real property that operating small businesses. But that’s just my personal experience. Would love to hear from anyone else that tried both.