Thanks to Larry MacDonald for contacting me and conducting the interview for Me & My Money, which was posted in Saturday’s edition of the Globe & Mail. As a relatively new personal finance blog, it’s great to receive this kind of attention from the media. Look for a follow up article on Boomer later this year.
For any new visitors who decided to check out the Boomer & Echo website after reading the Globe & Mail article, here is some further information about my dividend growth investing strategy. You can also take a look at some of my financial goals:
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Some of you may be wondering why I chose to give up my anonymity to do the Me & My Money article. When my mom and I started this website, we didn’t really have a reason to use our real names…and the “Boomer” and “Echo” handles obviously fit with the concept of what we were writing about.
When Larry contacted us to do the interviews, we decided that it would be a great opportunity for us to gain additional exposure for our website. We also felt comfortable enough that what we were disclosing about ourselves financially on this blog wouldn’t have any negative impact if we chose to reveal our true identities.
So once again thanks to Larry MacDonald for taking the time to do this interview, and stay tuned for Boomer’s Me & My Money profile in the near future.
Remember going to a craft and hobby show or looking through a magazine and seeing in your mind’s eye all those great projects you could make? Or watching the sports channel and dreaming about aces, holes-in-one and the salmon you could catch? I’m not saying there’s anything wrong with having a hobby.
Hobbies can be relaxing and a great way to get together with like-minded friends, but many times the dream is a lot better than the reality.
Expensive Hobbies
Hobbies need time to master and a lot of practice before you become an expert or even just skillful. Also, to create your masterpieces you won’t be satisfied unless you have all the expensive equipment and enough gadgets to fill a good-sized closet (or room) and empty a good-sized bank account.
It’s easy for us who share the impulsive gene to make snap decisions, and before we know it we’ve brought home the bag of scrapbooking supplies that never made it out of the bag.
We think we’ll get to that great project as soon as we have the time. Or, that pulling out all the supplies and then having to put them all away again is too much of a hassle. Or, our initial attempt is pretty amateurish and disappointing, and we think we’ll never be good enough to master the skills so why bother to try again.
Related: 35 Ways To Save Money
So instead of jumping in with both feet, sign up for a class to check out a new hobby. A few sessions will tell you how committed you are to the craft. Then if you decide it’s a go, look for equipment and supplies on eBay or similar sites. You’ll be amazed at what you can find for sale by others who got a bit too ambitious and bought the whole caboodle.
When you consider that enough yarn to knit a sweater can cost $75 or more, a digital camera with removable lenses can cost over $1000 and scuba diving equipment up to $2000, looking before you take the leap will keep hundreds, if not thousands in your wallet.
By all means, enjoy your hobbies. Have fun. Some people can even turn their hobbies into a lucrative business. But don’t waste your money on something that may seem like a good idea without further investigation. Other people might thoroughly enjoy an activity, but maybe it’s just not for you.
Have you ever looked at the line-up of cars waiting in a Tim Horton’s drive-thru and thought, “Is this place just a license to print money?” I’ve often wondered about the cost of starting a franchise, and whether or not the initial capital investment and time involved would be worthwhile.
I’ve researched some of the top franchises in Canada and the results were quite surprising. Here is a list of popular franchises and how much they typically cost to open:
Starting a Franchise
1. McDonald’s – Serves more than 56 million customers a day with over 30,000 locations in 118 countries. More than 70 percent of McDonald’s restaurants are owned and operated by local business people. 20-40 employees are needed to run a franchised unit. 82 percent of franchisees own more than one unit. Absentee ownership is not allowed.
- Total Investment: $950,200-$1,800,000
- Initial Franchise Fee: $45,000
- Royalty Fee: 12.5%+
- Advertising Fee: N/A
- Term of Agreement: 20 years
- Renewal Fee: $45K
- Minimum Financial Requirements: New owner must pay 40 percent (cash) of total investment
2. Tim Horton’s – With more than 2,800 locations across Canada and 500 in the United States, Tim Horton’s is a national icon. The Canadian operation is about 95 percent franchise owned and operated. 25-30 employees are needed to run a franchised unit. 58 percent of all franchisees own more than one unit. Absentee ownership is not allowed.
- Total Investment: $409,200-$665,700
- Initial Franchise Fee: $35,000
- Royalty Fee: 2.5% to 4.5 %
- Advertising Fee: 4%
- Term of Agreement: 10 years
- Minimum Financial Requirements: New owner must pay $144k (cash) of total investment, plus have $50k (cash) in working capital available
3. Subway – Operating 33,538 restaurants in 92 countries, Subway is the world’s largest restaurant chain. 6-10 employees are needed to run a franchised unit. 65 percent of all franchisees own more than one unit. Absentee ownership is not allowed.
- Total Investment: $78,600-$238,300
- Initial Franchise Fee: $15,000
- Royalty Fee: 8%
- Advertising Fee: N/A
- Term of Agreement: 20 years
4. Domino’s Pizza – Over 8,600 stores in 55 countries, Domino’s is one of the world’s leaders in pizza delivery. 15-20 employees are needed to run a franchised unit. Absentee ownership is not allowed.
- Total Investment: $119,950-$461,700
- Initial Franchise Fee: $3,300
- Royalty Fee: 5.5%
- Advertising Fee: N/A
- Term of Agreement: 10 years
- Minimum Financial Requirements: $50k liquid assets, and must have successfully managed a store for at least one year
5. Booster Juice – With over 170 stores in just 7 years, Booster Juice is the fastest growing juice bar in Canada. 8-10 employees are needed to run a franchised unit. 10 percent of all franchisees own more than one unit, however they are required to buy multiple units/master licenses. Absentee ownership is allowed, but 95 percent of franchisees are owner/operators.
- Total Investment: $214,500-$244,500
- Initial Franchise Fee: $20,000
- Royalty Fee: 6%
- Advertising Fee: N/A
- Term of Agreement: 5-10 years
- Renewal Fee: $5K
- Minimum Financial Requirements: $350k Net Worth and $100k liquid assets
As you can see, most franchises have a very strict selection process for accepting new franchisees. That’s not surprising, considering that when starting a franchise with one of the top franchises in Canada they want to ensure you are committed to the keeping the integrity of their brand to the highest level.
What was surprising to me was how much cash was needed to fund the initial investment. I had a pretty good idea of how much franchise fees were, but the amount of liquid capital needed when starting a franchise is huge.
Related: Preparing Yourself Financially Before Starting A Business
Starting a Franchise – Best Value
From this list, I view Subway as the best value for someone looking at starting a franchise in the fast food sector. For a minimum of $78,000 plus the $15,000 franchise fee, you can have one of the most recognized restaurant brands in the world. They didn’t have any outrageous personal financial requirements, as you could access traditional methods of financing to fund the investment without having to pay a large portion out of your own pocket.
Personally, operating a restaurant franchise is not high on my wish list. The financial reward might be worth it in the end, but at the cost of the majority of your time. I would much rather let my dividend income work for me over time. Tim Horton’s may be a license to print money, but I’m not buying it.
Would you consider starting a franchise?