How to Lose all Your Money in Franchising


Everybody thinks all they have to do is buy
a big name franchise, sit back and become a millionaire. But what you don’t know, but should know is
people quite regularly lose all their money, their retirement funds their nesteggs buying
into franchise industry hype. In this video I’ll tell you why it’s unlikely
that big name franchises wont make even close to what you expect, and if you aren’t careful
you could lose everything. New logo and new branding, Lots of changes
at franchise city over the coming weeks. We are going to go outside franchising and
discuss business, investments and making money in general so stay tuned for that. So let me be the one to say it. If you are not careful you can very easiliy
lose your money in franchising. That might sound strange coming from someone
who is in the franchise industry but to say otherwise is ignoring hard facts. Now it’s sad that despite all the information
available online, services like ours that educate franchise buyers, and more data available
than ever before – most people still think buying a franchise, and usually a food franchise
is a guaranteed no risk ticket to riches. If you follow this channel you will see our
videos that show how Subway, the franchise everyone thinks they should own, is actually
the 2nd lowest earner in the QSR50, and how they closed about 350+ stores in 2016 and
closed over 900 stores in 2017. These are real, people with real lives who
have nothing to show for hard work. You will also see videos on McDonalds franchise
average earnings and how they dropped. You will see videos on many franchises that
provide hard data illustrating the other side of the franchising equation. Now there are good franchises, even great
franchises but they usually aren’t the ones people are thinking of. So given this available information why do
people still make these terrible franchise buying decisions and end up barely making
a living, or worse, losing their money. Well they buy for all the wrong reasons. And unfortunately that’s why sites like unhapyfranchisee.com
are filled with people who went bankrupt because they used all these wrong reasons to make
their franchising decision. So what are these bad reasons why people lose
their money? First is social validation. Our brains are hardwired to equate these big
numbers with success. There are over 33,000 Subway franchises worldwide
that must mean they will make me successful. I’ll be part of this huge winning team…….. Oh that franchise I have never heard of – I
don’t want to even look at that one. There are almost 37,000 McDonalds restaurants
worldwide that must mean I will be a success if I join this huge powerful organization. Plus the last 3 times I went to that restaurant
it had a lineup waiting for food! Plus the Franchise 500, another huge organization
with enormous media clout voted McDonalds as their #1 franchise. In fact everywhere I look I see these companies
over, and over and over again with extremely positive social validation. How can I fail. Now most people then use these social validators,
and positive feelings to construct an emotionally charged vision in their minds. Oh honey can you imagine every day we go into
our franchise sun is streaming through the windows, happy customers existing in peace,
money raining down in huge, huge bags…… This is called emotional momentum.And the
more emotional momentum people have the harder it is to abandon this franchise even if you
hear negative things later on in the process. Now how might that work? Well call any major franchise today, right
now, and say, I want to buy a franchise how many of your franchises have closed up over
the last 3 years, what is the franchise failure rate, and your franchisee satisfaction rates. You wont get it. They won’t tell you. They’re going to tell you to complete an application
and wait. While you are waiting on the edge of your
seat, hoping to join the 10’s of thousands of other super successful franchise owners
you naturally start dreaming about how great this business would be….. sun is streaming
through the windows, happy customers existing in peace, money raiing down in huge, huge
bags……you know the deal…… Then the franchise finally calls …you were
accepted!! And some really sexy glossy promotional literature
is sent, offical looking corporate stuff, and emotional momentum will often force you
to miss or even ignore the boring old numbers that you don’t want to look at because it
is not in keeping with your emotional momentum, with this blissful image in your mind. We see it all the time people ask us about
their franchise idea and when we give them hard financial facts, taken right from the
books of the company, they don’t want to hear it. Their eyes gloss over and all they hear me
saying is blablabla and we become the bad guys trying to tear
this wonderful dream away from them. Once this emotional momentum builds up – its
hard to get people away even with the facts and figures. People….. facts and figures are what should
be guiding your decision not emotional momentum, or social validation, or beautiful thoughts
of how awesome your life will be once you own this franchise. OK great Robert so we know not to use emotional
momentum, or social validation but what about the Franchise 500 ranking McDonalds as #1?. Surely we can use the data from Entrepreneur
magazine, one of the biggest and best, to guide our decisions? Well did you read the fine print for the Franchise
500? There is a disclaimer stating they dont endorse
or recommend any brand and they dont measure subjective elements like franchisee satisfaction
or management style. So how are the franchises in the 500 picked? From the Franchise 500 website:
All companies are judged by the same criteria: objective, quantifiable measures of a franchise
operation. The most important factors include financial
strength and stability, (Really, these are the numbers taken from statista from 2013
to 2017 for McDonalds …..thats not the way I would think the numbers should go for financial
strength and stability for the #1 franchise growth rate and size of the system.(so if
a company sells a ton of franchises with really heavy sales techniques they go to the top,
even if franchisee satisfaction is terrible because remember they don’t check that) We
also consider the number of years a company has been in business and the length of time
it�s been franchising,(heres a long list of franchises that were around a long time
and went bankrupt) startup costs, litigation, (OK GNC has more litigation than I have ever
seen and is #85 on the Franchise 500, and 7-11 not too far behind and they are #2 – so
is it the companies with the most litigation are at the top?) percentage of terminations
and whether the company provides financing. (Really. so if a company provides financing that supposedly
great criteria to use. They then go on to say The objective factors
are plugged into an exclusive Franchise 500� formula, with each eligible company receiving
a cumulative score. (Thumbs up) Now let’s be honest. People use this 500 list all the time to validate
investment decisions. Despite Franchise 500’s disclaimers telling
people “The Franchise 500 is not intended to endorse, advertise, or recommend any particular
franchise” franchises do use their banners on their websites to do exactly that. In fact this franchise has the Franchise 500
banner rankings listed below text stating “THE PROOF”. This franchise claims that the Franchise 500
is absolute proof their franchise is a good investment. So people see this social validation, they
think this must be great and they absolutely do use these rankings to make their decision. Now I have blocked the name of the company
out but This company that was ranked “Top Global Franchise, and “Best of the Best” by
Franchise 500, closed over 625 stores in the last 3 years. And that is how you lose money in franchising. remember -use information like the Franchise 500 and other ranking systems what they are. entertainment – they even caution you to do
so on their websites. They are handy to have but if you use any
of them to make your final decision you have no one to blame but yourself. And the really sad part is to see people after
working 30 to 40 years hard at their career having saved and scrimped for a great retirement,
using illogical reasons to invest. Be careful, be critical, avoid emotional momentum
and forget about social validation when making a decision. Ill put links to other videos here on the
screen like The Truth about McDonalds, Top reasons to Not Buy a 7-11, and 4 Top Reasons
to not buy a Subway, and you can subscribe to us right here. If you need help finding, researching or buying
a franchise give the experts a call AT http://www.franchise.city

57 comments on “How to Lose all Your Money in Franchising”

  1. Eli Bromlow says:

    I bet that the Fortune 500 company has received financial support by McDonald's. Would you please do an franchise assessment on owing an INN-And-Out Burger franchise, I would love to learn more about the franchise opportunity with this company.

  2. J o l l y G r a p e f r u i t says:

    It almost seems as if a franchise becomes a worse investment the larger it grows

  3. jackiechandc says:

    Great info! Thank you!

  4. Juanco_"C.E.O." says:

    Great freaking channel sir!

  5. joe smith says:

    I have recently discovered this channel and been binge watching. I am in the process of starting my portfolio and lots of good information here

  6. PhilemonXIV says:

    This information is worth thousands of dollars of potential money down the drain… awesome channel.

  7. roottruthseeker says:

    people forget the work part of the franchise. if your franchise is serving crap you can go broke real easy. mcdonalds is so easy. if you have the right market and your stores sales are dropping, congrats you've hired awful employees. mcdonalds does seem to allow. my favorite mcdonalds still has cars around the building like its 1980 russia. the food still tastes good when done right!! they are always busy day, night. the location doesn't even seem that great. they pay their workers good wages. hire the best, fire the rest!.

  8. And We're Back says:

    Owning a business is 2 full time jobs. The work and running it.
    One of my old bosses used to say once the door is unlocked and the lights go on it costs $5000.

  9. Q. P. says:

    Can you talk about Starbucks

  10. tony wilson says:

    In the words of P.T. Barnum ( My idle) There's a sucker born every minute!

  11. moparmon says:

    i'm gonna open up a used tire shop

  12. Daytona Florida says:

    I have owned a business for 40 years and if nothing else this guy gives it to you straight.

    I have known many people through the years who were big on dreams and totally lacking in Business Sense or any concept of what a Profit-Loss Statement is.
    All they knew is they wanted to "Get Rich" and every time I turned around they were chasing something new.
    Let me tell you something folks.
    None of them made it.
    Not one.

    There is nothing Glamorous about running a business regardless of what it is.

    It is WORK.
    HARD WORK.

    And if you think you have stress now, running a business will increase that stress dramatically.
    Owning a business is no longer about " YOUR " Pay Check.
    It is about Customers, Government Regulations, Accountants, Employees ( that get paid even if there is nothing left to pay you), Withholding taxes, FICA Matching, Workers Compensation, and last but not least……… OVERHEAD.

    It is also about FORMS.
    LOTS of Forms;
    Prepared by your Accountant, signed by you, and sent to the Government with whatever amount happens to be by the little red arrow sticker on the line next to "What You Owe".
    Those are the things you will be thinking about and there is nothing care-free about it.

    Also, the way you see the World will change dramatically.

    As an Example:
    Those endless "Free Consultation" Lawyer ads you see will no longer be viewed as annoying at worst or a potential Financial Windfall at best.
    They will now be viewed as a threat.

    Depending on your business you will see yourself one frivolous lawsuit away from financial ruin.
    Because the BILLBOARD lawyers work for free while YOURS works at $250.00 an hour.
    And even if you win,…you still lose.
     Because whoever sued you is out nothing while you still have to pay all the Legal Fees required to defend your business.

    Business is NOT for children, the Dreamers of the World, or the Bernie Voters with the "Co-Exist" Stickers on the back of their Prius's.

    Business is for hard-nosed survivors who realize every Government Regulation puts them one step closer to Bankruptcy while their employees act like spoiled children who believe their bosses, just like their parents years ago, must have a "Money Tree" in the backyard.

    If you just want to "Get Rich" or "Be like that guy in the Mercedes" , you will not succeed.
    Just play the Lottery.
    It only costs a dollar and will not wreck your Life Savings.

     Every business requires hard work, sacrifice, and the understanding that whatever you get will have to be earned the hard way.
    There is no easy way.

    If you accept that, understand as the owner you will ALWAYS be the last to get paid, and choose the right business you might just make it.

    It won't be easy .
    And yes, you may eventually be that guy in the Mercedes.
    But the day you buy it, it won't feel the way you thought it would.
    You will have greater maturity and a better understanding of the sacrifices it took to get you there.
    It won't make it drive any better but it will make you appreciate it more.

  13. Patrick King says:

    I developed a theorem years ago when I was a student member on a finance committee that was charged with allocating a few million dollars every year at my university: "Emotions and Finance don't mix" Emotions (essentially hormone and chemical imbalances) cause people to do stupid shit. From poor business decisions, to poor marital/divorce decisions, to general purchases, poor investments, spending foolish and lavishly when coming into large sums of money (e.g., lottery, inheritances)…etc.

  14. SallySallySallySally says:

    One thing I noticed right away a long time ago is that these "trade publications" have no wall between their editorial and advertising departments. I'm sure Entrepreneur magazine is no different. They likely give great weight in their "secret ranking formula" to those companies which also purchase advertising in their magazine. In fact, one such magazine (in a different industry) actually sent me a solicitation to advertise with the promise of "positive and prominent mentions" within their editorial stories. In other words, everything in these so-called trade publications is really paid advertising from cover to cover.

  15. jmar1973 says:

    Okay,I lost it at the stock photos during the "Emotional Momentum" part, and the "BLA BLA BLA" part!
    Thanks again for this valuable information!

  16. Jerry Moody says:

    I watched a wonderful family buy an existing Quiznos and they worked themselves to death and lost all their money. They shut it down.

  17. M Math says:

    Subway is a prime example. Many owners losing everything

  18. bobbysworldrox says:

    Can you make a video on starting and running a church franchise??

  19. 1D 1R A C U 1L A 209 !! says:

    This guy knows what he's talking about. He can see through the bullshit.

  20. LOG from Blammo says:

    Enjoying your videos Robert, very informative and well presented. Subbed.

  21. 鹿の骨格 says:

    Only 14k subscribers? THAT'S WHY MILLIONS ARE POOR

  22. James S. says:

    I looked through your videos and I didn't find anything about storage unit franchises, or independent.

    It looks like most of the investment is in the real estate footprint.

  23. David W says:

    If running the business was better than selling the franchises, the franchises would be company stores and not franchises.

  24. Red Phoenix says:

    @1:26 Nope, I have seen a Burger King or a McD shutting down. You buy a concept but you don't buy success.
    @2:59 It could that potentially they succeeded on the expense of their franchisees like this Christian fundamentalists.

  25. Dave Rogers says:

    Your presentation on social validation and emotional momentum was very well done. It actually applies to much more than just franchises. Great job.

  26. RealestRealist says:

    Sounds like having common horse sense AT ALL would come in real handy for a lot of these fools

  27. Don Ochoa says:

    Coin laundry franchise?

  28. Jose Antonio Romero Palms says:

    Franchiae city I love the introduction of the video.. And it's totally true.. Maybe you think franchise could make millionaire.. I was thinking to inveat in a franchise in my country Mexico, named as "agua inmaculada" the entertainment paints everything very nice, where you can work few hours, I investigate about it and I found they was closing many of those because not technical support, and kind of bad product so I desire to avoid cheap franchises. This guy and channel is a new mentor for me.. And now I can analyze before throw out my money in something good or bad. Thanks

  29. Fatha Truth says:

    What about Checkers?

  30. iHave NoName says:

    Only thing that matters is LOCATION. Not what franchise to choose, tacos or burgers, pizzas or hot-dogs etc… that's the narrative that's being pushed by franchise companies because basically they're looking for suckers…Don't invest in franchise it's not for everyone, open your nice little shop in a great location or do nothing

  31. J king says:

    This guy is an Oracle .. very knowledgeable .. all his videos are Unbaised and straight foward..

  32. necroslair says:

    "Sunshine coming through the windows," and, "Happy customers," eh? Put in, "customers vs employees," or, "customer freakout," in youtube's search function and see how many of the incidents (that aren't in walmart) are in these franchised places…

  33. iCoNiC 01 says:

    How do we plau ad

  34. Scott October says:

    was that a 900 more subways closed in 2017 or an additional 300 from 2016?

  35. Don G. says:

    Great channel.

  36. Bullet Tooth Tony says:

    Famous franchising is basically the strategy of "how do I expand my business by opening more locations for FREE and have hard working people work there several years, for minimal amount of money and guaranteed income for me".

  37. Ashfaq Sheikh says:

    An eye-opener video. I just subscribed.

  38. Niko Bennett says:

    Great video, very informative! Most people do not want to hear this but most people need to hear this before buying into a franchise.

  39. Legacy Turbo says:

    Don’t buy a Burger King franchise in CANADA lol especially in Ottawa Ontario. They’ve pretty much all gone bankrupt.

  40. Snack Me Vending says:

    I'm loving these videos. You are very clear and make key points. Thank you.

  41. Kevin Liu says:

    Love u channel. Much Thanks for the info.

  42. Federico Leguizamon says:

    Robert. I've heard you say here and there that investing in print shops can be a smart idea. Can you give some more insights about that? How about a company like Alphagraphics? They seem solid.

  43. Truthfears Guilty says:

    if you have a decent amount of money, the best franchise is NOT TO FRANCHISE.

  44. Mechforce-USA says:

    Money bag from heaven

  45. Oliver Dobbs says:

    I’m never going to nor want to own a franchise… but I can’t stop watching these videos! So interesting.

  46. Clay Jackson says:

    That's a huge clock!

  47. Brenden James Martel says:

    It could take 10-15 years to make initial investments back from a McDonald's nowadays, from my calculation, lol!

  48. ATLANTIS B says:

    what do u think about burgerim franchise

  49. Shadowman says:

    I've noticed that in American culture, reality checks are actually viewed as "negativity". "Negativity" is shunned and shamed when it should be acknowledged when making important choices in life. There's this narrative of false positivity that ultimately leads to a harsh come down in the future.

    Although I don't think I'll be buying a franchise soon, I appreciate the insights in your videos.

  50. Mo Ellis says:

    That's a lie you don't have to do too much homework on investing especially if one starts off small and if one knows what one is doing not a lot of money has to be spent either yes it's possible to invest 1.00 If one wanted to

  51. howzit3000 says:

    I rather start my own business at the flea market. Or just work at places that pays $12-15/ hour. You make little money but sleep better.

  52. Hassan Bazzi says:

    You are absolutely correct. The 500 list was mentioned to me when I almost got involved in a franchise. I wanted to get a Tim Horton coffee shop but the don’t have any business in Florida yet. Lucky me, I listen to one of your videos about TH and it was not great. Love to hear about Urth Cafe‘ in California. They are fantastic but the web site says that the franchise but the owner said no when I emailed him. Thank you so much for your videos

  53. M B says:

    You just saved my money! I was considering CHEM-DRY franchise. I was trying to research the company. It’s almost impossible to find real people experiences.

  54. Anamitra dey says:

    Congrats you got a new subscriber from India…✌🏻🇮🇳❤️

  55. Ahmed Mortada says:

    Subscription from Egypt ,, amazing man talks about business

  56. Paul Price says:

    Buy a franchise and sit back and become a millionaire. That is just delusional thinking. All businesses require owner participation and sharp realistic thinking as well as carefully hiring the right people. If you cannot do this then get a degree or certificate and a job.

  57. Shivani Dhanesha says:

    Hey what are your thoughts on boost juice plz guide

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