Growth Trends for Related Jobs
Franchise ownership often starts with choosing the right product or service -- one in which you enjoy selling or have extensive experience. The product or service must also have mass appeal with the potential for repeat business. Once you determine the type of business you want, investigate franchises that meet your needs regarding start-up costs, product lines and training. Whether you're selling ice cream, health food or running a trucking franchise, you can expect to earn an annual salary averaging nearly $60,000 annually, once you establish a regular customer base. However, owners of high-end franchises can earn considerably more.
Average Salary and Qualifications
Franchise owners earned an average annual salary of $58,000 as of 2013, according to the jobs website Indeed. As a franchise owner, you may pay yourself a salary from your profits, or report your net profits as income. In either case, you won't be making much when first starting out because you'll need to reinvest in your earnings inventory and advertising, according to the U.S. Small Business Administration. Most franchise owners have at least high school diplomas, and one to five years of experience running or managing a store or business. You also need the money to purchase a franchise, or a high credit score to secure a loan -- 700 or above, according to Small Business Development Director Bill Keegan of the State University of West Georgia. Other essential qualifications for franchise owners are an attention to detail, creativity, self-motivation, and management, analytical, problem-solving, communication and computer skills.
Not everyone can purchase a top franchise, such as Subway, Pizza Hut, Hampton Hotels or McDonald's, as the initial investment can exceed $1 million. But owners of franchises like these can earn six-figure incomes and higher. They often start by purchasing single franchise units, get them staffed and running efficiently, and then purchase additional franchise stores. These franchise stores can gross $1 million or more in sales per year, and despite all the labor, inventory, equipment and franchise fees, the owners can still earn at least hundreds of thousands in profits. Multiply those profits by five or six franchise stores, and it isn't impossible to earn $1 million or more dollars per year as a franchise owner of this type of business. The key is hiring experienced managers who can run the units.
Salary by Region
In 2013, average salaries for franchise owners varied considerably in some U.S. regions. In the South region, they earned the highest salaries of $68,000 in Washington, D.C., and the lowest of $49,000 in Louisiana, according to Indeed. Those in the West made $40,000 to $63,000 in Hawaii and California. If you owned a franchise in the Northeast, you'd make $50,000 to $70,000 per year in Maine and New York. In the Midwest, your salary would be the highest in Illinois at $70,000 and lowest in South Dakota at $44,000.
A franchise owner may earn more in certain industries. For example, as of May 2012, first-line supervisors of sales workers, or store managers, earned the highest salaries of $86,820 working for insurance companies, according to the U.S. Bureau of Labor Statistics. They also earned relatively high salaries of $74,720 managing auto dealerships -- versus an industry average of $40,910 for all first-line supervisors. Therefore, you may also earn more owning a life insurance or auto dealership franchise. You can expect your earnings to increase as you advertise and get more customer traffic -- and build repeat business among those customers.
The BLS doesn't forecast jobs for franchise owners. It does project only an eight percent increase in jobs for front-line supervisors of retail sales workers from 2010 to 2020, which is slower than the 14 percent growth rate for all occupations. Your success in finding available franchise opportunities will be contingent on the economy, industry and interest in the product or service. For example, insurance franchises are readily available because people always need insurance. Contrarily, you may find fewer clothing franchises during slower economic times.
- U.S. Bureau of Labor Statistics: Data for Occupations Not Covered In Detail: First-Line Supervisors of Retail Sales Workers
- U.S. Bureau of Labor Statistics: Occupational Employment Statistics: First-Line Supervisors of Retail Sales Workers
- U.S. Small Business Administration: Your Salary As a Franchise Owner
- Indeed: Franchise Owner Salary
- U.S. Small Business Administration: What Will 2013 Look Like For Franchising?
- Indeed: Franchise Owner Salary in Maine, and New York
- Indeed: Franchise Owner Salary in Hawaii, and California
- Indeed: Franchise Owner Salary in Louisiana, and Washington, DC
- State University of West Georgia: Preparing for a Small Business Loan
- Michael Blann/Digital Vision/Getty Images