Franchises Under $10K | Losing Money

Are there any franchises under $10K that actually make money? Allow us to crush your dreams
(probably save you $10k!) and reveal why so many people lose their money in this segment.

Shame on the media for creating endless articles on all of these "great" franchise opportunities for under $10k. Articles like this one from CNBC "These 10 low cost franchises can make you rich"

They focus on the 10K segment for clicks. More people read "under $10K" franchise articles because more people have $10k than have $100k or more. Note first that these articles are never written by franchise experts but by journalists, and where do they get their information? From the internet, where most of the information is completely wrong or paid for. Even massive industry lists like the Franchise 500 are put together by people with zero franchise experience. We covered that before on the channel.

So people surf the web, see "Hey CNBC is a legitimate outlet and they say we can get rich. Marge, we have $10k maybe we should look at a franchise" And many if not most, lose their money.

Some of you may be asking "If there are thousands of people each year who lose their money to a franchise why dont we hear about it"? People would leave bad reviews online, right? See this? This is an FDD, or franchise disclosure document. By law anyone who is selling a franchise must give you one of these, this is an older one many companies do electronic today. Point being these are often hundreds of pages long, in fine print, even if you read the whole thing you could miss one tiny sentence because you dont know where to look, and most people investing only $10k dont have the $2k to hire a lawyer to look it over. But here is why you never hear about people who lost their money or want to complain. In fine print hidden in the text of one FDD "Should franchisee divulge the terms of this amendment to any third party other than spouse, tax advisor or attorney, franchisee agrees to pay liquidated damages equal to the franchise fee"

One paragraph, hidden in thousands of paragraphs that most people dont read. Buyers get so pumped up by the company sales person telling you about the few people that did make money, and they seem so nice, they just sign the agreement without reading the disclosure. Many franchise agreements have liquidated damages clauses that can put you on the hook for more money even after your franchise closes, even if it isnt your fault and their business model stinks.

Most franchise agreements have some kind of a non-disclosure order that can hold you financially liable if you reveal anything about your relationship. And thats why you rarely hear from people who get ripped off. Sometimes people who are bankrupt just dont care anymore and do decide to whistleblow, but remember most of the media makes money from franchises so exposure is throttled. We've interviewed people on the channel who have lost a lot more than $10K, like Sherrance Henderson who lost millions toa franchise, or Marcos Enruiquez, who lost over $100k Euros to a franchise. This is a huge problem even with franchises costing more than 10K, but because the media is often tied to the billion dollar franchising industry, you never hear about it.

Now that's even if they have an FDD. Many don't and will tell you they don't need one. If a company calls itself a franchise, or is a franchise model, by law they must register an FDD, If they didnt they are illegally selling franchises, many companies do this, that's another story altogether, but basically steer clear of any company that illegally sells franchises.

But why do these $10,000 and under franchises fail at such a high rate? Consider a franchise with a $50,000 franchise fee. A good franchise will allocate more of that money towards franchisee support. Good franchises will have multiple employees dedicated to your success, so always ask how many employees are available to help you if you invest.

Also in most cases what these businesses have realized it is much easier to package and sell their service as a business than it is to sell the service itself. You see the same situation with these internet marketing gurus. When selling on Amazon made a ton of money nobody sold a course. Once selling on Amazon became really competitive you saw dozens of gurus now selling you the "secret" to success.

SORRY OUT OF ROOM FOR TEXT! PLEASE SEE VIDEO FOR END.

Marcos lost $100K to a franchise https://youtu.be/qLzMGuDXGww
Sherrance lost millions to a franchise https://youtu.be/0TzuTYbJIsQ
The Truth of the Franchise 500 List https://youtu.be/4iBOusezuLw

@FranchiseCityOnline