Which “Pays” More- A Corporate Job or a Franchise?

Corporate Job Vs Franchising | Franchise Coach

Corporate vs franchise – between the two, which pays more? Let’s compare the two career paths of franchise vs corporate and see which is more lucrative.

The key difference between a corporate job and franchise ownership is that a job requires no upfront investment. Conversely, owning a franchise requires an initial investment.

Hopefully, your franchise business could become profitable quickly.

When your business generates enough cash, you can either pay yourself or invest more in it. As the franchise grows, you could be able to increase your salary as well.

And that is typical for most franchisees when they first gain profits, they pay themselves a small salary and invest the remainder into the business. As the franchise grows, they hope to pay themselves a much greater salary than the corporate salary.

In an ideal situation, running your business, in the long run, will give you a higher return compared to a corporate salary and also owning a valuable asset. Let’s compare earnings from 5 years as a corporate executive and a franchise owner. 

Earnings: Corporate Executive vs Franchisee

To put it simply, lets compare franchise vs corporate earnings refer to the amount of profit made after deducting all costs and expenses. In business terms, this is what remains when you subtract the cost of goods sold, operating expenses, and taxes from total revenue.

So how do salaries for corporate owners differ from those who own franchises? Let’s find out!

Corporate Executive

Executive pay, more commonly known as executive compensation, is an attractive remuneration package meant to entice and reward business executives and those in higher positions within a company.

Executives are typically remunerated with a selection of benefits such as salaries, perks, incentives, and insurance.

The following are hypothetical salaries as a Corporate Executive:

Year 1: $100,000

Year 2: $103,000

Year 3: $105,000

Year 4: $110,000

Year 5: $115,000

Total Salary Earned- $533,000

Franchise Owner Earnings

Owning a franchise can be a dream come true for many entrepreneurs, but there’s more to it than just cashing royalty cheques. As a franchisee, you’re essentially running your own corporate job by following the parent company’s brand and business structure.

Franchise owners are rewarded for their hard work with an ongoing stream of royalty payments; however, these payments are not always straightforward. Businesses vary in how they compensate their franchise owners and what types of return on their investments they should expect.

It is important that any potential business owners thoroughly evaluates the company’s setup of any franchising opportunity to truly understand what kind of compensation they can expect in exchange for following the company’s guidelines.

The following are hypothetical salaries as a Business Owners:

Year 1: $0

Year 2: $50,000

Year 3: $80,000

Year 4: $120,000

Year 5: $150,000 

Total Salary Earned- $400,000

Franchise Ownership Empowers!

Corporate vs Fanchise (Franchise Ownership Empowers) | FranchiseCoach

A corporate job would generate $533,000 over 5 years. Owning a franchise would generate $400,000 over the same period. At first glance, a corporate job appears more profitable than owning a franchise. This is false.    

The big advantage of franchise vs corporate is that franchisee are able to build equity. For example, let’s say that the franchise business is worth $300,000 after 5 years.  This would increase the total 5-year return for the franchise to $700,000. This is significantly higher than the $533,000 generated as an employee. 

Are Franchises Really Worth the Risk?

Weighing the pros and cons of corporate life versus owning a franchise can seem like an impossible task – it’s a large risk to take on. On one hand, corporate jobs offer reliable wages and corporate support; while franchises require capital investment, long hours, and consistent hard work with no guarantees of success.

Both have their benefits – corporate stability or potential financial freedom – but are franchises really worth all the risks?

The answer may differ depending on the business person, but if managed correctly, with the help of a parent company, succeeding in a franchise can provide intangible rewards that corporate life can never give you.

Here are the tips to make your transition successful.

1. Do your research:

Understand the franchise business model, franchise locations, corporate structure, and costs involved before making a decision.

2. Create a business plan:

Establish clear goals for yourself when setting up your owned and operated business as well as an exit strategy in case you need to pivot or shut down operations.

3. Network with other Franchisees:

Connect with existing business owned by franchisees in order to gain insights into their successes and failures so that you can learn from their experiences and improve upon them with your own approach.

4. Develop financial discipline:

Proactively manage cash flow by only spending money on necessary expenses such as payroll, legal fees, inventory purchases, etc., while also creating savings plans for future investments.

5. Hire Expertise When Needed:

Don’t be afraid to outsource specialized tasks like accounting and marketing services if needed – this will save time and energy while ensuring quality results are achieved quickly and efficiently!

6. Stay Up-to-Date With Technology & Trends:

Keep tabs on what’s new in the corporate world such as software advancements and the latest trends; this will help inform you how best to adjust your approach over time based on current market conditions.

7. Foster Relationships With Customers & Vendors Alike:

Relationships can be built as a corporate executive, but as a business owner, they become even more important. Make sure to keep in touch with your customers and vendors to build a loyal following of supporters who will help your business grow.

Bonus read: How Do I Know if Franchising is a Good Fit for Me?

Conclusion

In the corporate world, you may be climbing the corporate ladder and taking on increased responsibility, but the potential financial reward is limited. If you want to maximize your earnings and benefit from a more flexible lifestyle, corporate vs franchise – owning a franchise could be the answer.

By investing in a franchise business, corporate executives can potentially increase their earnings over 5 years from $100,000 to $150,000 or more.

Corporate executives considering a transition from corporate life to business owners will find that franchising offers both financial rewards and the freedom to make their own decisions. They can use their skills and corporate connections to make the leap from corporate executive to franchise ownership.

Ultimately, with dedication, knowledge, and hard work, corporate executives can create a successful and profitable business while enjoying the corporate lifestyle they desire.

If you are interested in investing in a franchise let us help you to find the best franchise match. Book a time here for an initial conversation.

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