Franchises

[Phillip Richardson]

Hello everyone:

I am a recently new member to BP, and wanted to reach out to the Bigger Pockets community and seek advice regarding Franchises. 

I am looking at acquiring a commercial property on a heavily trafficked location-the building was recently rehabbed, but is currently vacant. If I can get the property for the right #, my thought is to use one of the units to open a pizza franchise and rent out the second unit.

Any of those in the community have experience opening and operating franchise locations? 

[John Hyatt]

Hi Phillip,

I have no experience in operating a pizza franchise, but I do have a couple of stories about pizza franchises:

Story #1: my dad’s friend opened a pizza franchise and worked well over 80 hours a week for several years to barely make it. After struggling for several years he ended up selling the property and made more profit from the sale of the building then he did from all the years of working 80 hour plus weeks combined. As you can imagine this is what got him involved in real estate.

Story #2: my dad owned a commercial building and was looking to buy a subway or dominoes franchise since he could essentially get the land for free (minus opportunity cost and taxes). The commercial real estate agent advised my dad against it, he advised that he had seen several people attempt the same thing over the years and it almost always fails because the franchise in itself is a full time job unless you can afford to hire a manager to care for the operations.

9 out of 10 restaurants fail in their first year, 9 out of 10 of those fail in their second year, and so on.

I am not trying to discourage you from running a pizza franchise, I am only bringing this up to see is this really what you want to do? Are you passionate about food and will you do anything to make the pizza franchise work? Or are you just doing it for real estate purposes and because it’s a cool idea? If you aren’t passionate and if this pizza franchise isn’t your calling then I would recommend against it. However, if its been a dream of yours and you are willing to do anything to make it successful (including working 80 + hours) then I say go for it!

-John