Please Don't Buy a Food Franchise

Everyone thinks owning a food franchise is a fast track to wealth. But when I ask people how much they think the top food brands actually make, nobody knows. In this video we'll tell you how much the big food franchises generate per year, how much they cost to buy, why food franchises can actually be a bad choice and give you insider franchise investing alternatives that can generate as much as fast food franchise for a tenth of the cost. 28,500 food franchise owners spoke to Franchise Business Review about their earnings. 51.5 percent of food franchise owners earn profits of less than $50,000 a year. The average profit for all owners was $82,033. only about 7 percent are over $250,000. So yes, some people do very well but it is often locations that have been open for years. Starting a new franchise is different. what are some of the challenges of owning a food franchise? #1 Huge investment. McDonalds - and we have their latest numbers here for 2026 - $1,472,000 to $2,807,000 to open a location, burger king as high as $3,320,600, Tim Hortons USA $427,500 to $3,312,500. This does not include your real estate! BUt if the real estate is not included why are these franchises so expensive? This is the breakdown of costs for opening a Burger King franchise. Many franchises of this size cost similar amounts. Just the construction and improvements for a Burger King is between $1.2 and $1.8m. Landscaping will be $25-$60k. Their Décor package is $48-$95k. Your order taking system 20k - $25k, signage and drive through $150k-$230k, equipment is $250k - $304K, and we still aren't done with all the expenses. But you get the idea. But Burger King makes a fortune right? An average Burger King last year grossed only 1.6 million. Compared to a McDonalds average of over 4 million and a chick-fil-a at 7.5 million. This is your gross revenue all your expenses come from that. When you have a brick and mortar food franchise, your expenses are very high. #2 reason you may not want a food franchise are Remodeling costs. There is nothing worse than a dated looking restaurant with dirty bathrooms. But as a franchise owner you pay for those updates. We always ask our clients to check the FDD for remodeling requirements. Most franchises will "ask" you to remodel when they think its time. How much do you pay for a remodel? Lets look at Burger King again - so just think you paid 2 million for the franchise, 4 years later corporate tells you "Get a remodel" and the price tag can be around $650,000. #3 Food is highly competitive. You will be competing against other brands and your own brand. There has been a trend over the past few years in many major food franchises where we are seeing declining revenues year over year due to local competition, and of course economic pressure. That phenomenon leads to #4 Failure rates. In your own city you have probably seen franchise restaurants closing. We've covered them here, Pizza Hut hundreds of closures, Popeye's largest franchisee going bankrupt, Burger King hundreds of stores closing over the past few years. Subway we've been covering for almost 10 years, thousands of stores closed. Inflation, competition, and everyone being broke makes for a hard market to make back your 2 million. #5 reason to not own a food franchise - high overhead. Rent, employees, taxes, insurance, franchise royalties and fees. some food franchises have margins as low as 5%. So if you make a million a year, you take home $50k. You just bought yourself a low paying job and assumed all the risk. Some do have healthier margins between 10-20% but unless you find a great location this is a tough business. Also remember with a food franchise, or any brick and mortar store you also usually must sign a multi year lease which can be an obligation for hundreds of thousands of dollars that you may be asked to personally guarantee. What happens if you are one of those stores that close? There goes your retirement fund. Looking for a franchise? Call Franchise Inspectors BEFORE you buy! https://bit.ly/3RDGX20 Franchise Education Playlist - hundreds of videos!    • Franchise Education!   Free Book Download "The Dark Side of Franchising" Outlines the shady tactics used by unscrupulous franchise sellers and shows why thousands of buyers lose their investment. https://bit.ly/4dQtifo