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Wealth Creation

As we’ve stated numerous times throughout this book, one of the main reasons for becoming involved in franchising is wealth creation. With most license agreements averaging 15 years in length, we doubt anyone would become either a franchisor or a franchisee without the absolute expectation of creating long-term, sustainable wealth. In fact, of the more than 600 franchisees we surveyed, all of them expected the venture to create some personal wealth beyond their management salary. The trick, as if you could make it that simple, is to turn this great franchising idea into real wealth. Believe it or not, your success may rest not only on the quality of your product or service, but also on the quality of your partnerships with those you depend upon and those who depend on you.

The franchisee must make a series of investments in the franchise. The initial investment is disclosed in the United States through the Uniform Franchise Offering Circular (UFOC) and can range from a few thousand dollars to several million dollars. The operating results of the franchise are expected to provide a return on that investment. Often, over the life of a franchise agreement, reinvestment in property, plant, and equipment is required. Again, operating results need to support that additional investment.


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