3 ms·

I'm not convinced franchises aren't far off from pyramid schemes and MLM as well. https://en.wikipedia.org/wiki/Franchise_fraud https://en.wikipedia.org/wiki/F

I'm not convinced franchises aren't far off from pyramid schemes and MLM as well. https://en.wikipedia.org/wiki/Franchise_fraud https://en.wikipedia.org/wiki/Franchise_fraud Math on a McDonald's franchise is here- https://www.mymoneyblog.com/mcdonalds-franchise-cost-vs-profit.html https://www.mymoneyblog.com/mcdonalds-franchise-cost-vs-prof... "But if you spend 40 hours a week and only keep tabs on one location, it might really feel like you bought a job." It's looking like 5-6% net return is what you get which is worse than an index fund and you are working your ass off keeping the business running.

itsangaris 8y ago
They're similar, but I think the main difference is franchises aren't multi-leveled — they traditionally only have a single level between franchisor and franchisee.
cooperadymas 8y ago
How many individual people are buying new franchises these days? I can't say with certainty, but my impression is that most McDonald's (and other fast food chains, possibly other franchises as well) locations are then owned by semi-regional operators that run a number of franchises. Around here, I know most of the McDonald's are run by 1 corporation. Same with the Burger Kings. It was the same way where I lived previously.
- Digory 8y ago
  My impression is that McDonalds' margins are shrinking, forcing franchisee consolidation. Where margins are still fat, you'll find more one-off franchises. Chick-Fil-A, for example, used to limit "Operators" to one store. Real Estate agents are often franchises.
astura 8y ago
Franchises are nowhere near MLMs. Franchisees don't make the majority of their income from recruiting other people to become franchisees. Franchisees don't have "parties" where they utilize social pressure to get people to make sympathy purchases of things they don't want or need.
- astura 8y ago
  I have to add here, the FTC found that 99% of people lose money in MLMs. This is obviously untrue with franchises. https://www.ftc.gov/sites/default/files/documents/public_comments/trade-regulation-rule-disclosure-requirements-and-prohibitions-concerning-business-opportunities-ftc.r511993-00008%25C2%25A0/00008-57281.pdf https://www.ftc.gov/sites/default/files/documents/public_com... [PDF]

itsangaris 8y ago

They're similar, but I think the main difference is franchises aren't multi-leveled — they traditionally only have a single level between franchisor and franchisee.

cooperadymas 8y ago

How many individual people are buying new franchises these days? I can't say with certainty, but my impression is that most McDonald's (and other fast food chains, possibly other franchises as well) locations are then owned by semi-regional operators that run a number of franchises. Around here, I know most of the McDonald's are run by 1 corporation. Same with the Burger Kings. It was the same way where I lived previously.

Digory 8y ago
My impression is that McDonalds' margins are shrinking, forcing franchisee consolidation. Where margins are still fat, you'll find more one-off franchises. Chick-Fil-A, for example, used to limit "Operators" to one store. Real Estate agents are often franchises.

astura 8y ago

Franchises are nowhere near MLMs. Franchisees don't make the majority of their income from recruiting other people to become franchisees. Franchisees don't have "parties" where they utilize social pressure to get people to make sympathy purchases of things they don't want or need.

astura 8y ago
I have to add here, the FTC found that 99% of people lose money in MLMs. This is obviously untrue with franchises. https://www.ftc.gov/sites/default/files/documents/public_comments/trade-regulation-rule-disclosure-requirements-and-prohibitions-concerning-business-opportunities-ftc.r511993-00008%25C2%25A0/00008-57281.pdf https://www.ftc.gov/sites/default/files/documents/public_com... [PDF]