For people who want to get into the food franchise business, and want to do so on a budget, the best choice is a deal with Papa John’s International Inc. (NASDAQ: PZZA), which requires a minimum liquid asset base of only $50,000. At the other end of the spectrum for franchise financial requirements is Wendy’s, at $2 million based on the same measure. Since no one goes to Wendy’s, it is hard to see the bargain.
The National Employment Law Project (NELP) released a report that analyzes the chances for a fast-food worker to advance in terms of job improvement. Not good, NELP claims, because so few jobs are available that pay more than minimum wages. The chances that workers eventually will become franchisees is nearly nil. According to NELP:
[M]anagerial positions make up just 2.2 percent of all jobs in the fast food industry, with opportunities for franchise ownership remaining even more limited, making up just one percent of all jobs in the industry.
There is no apparent relationship between the brand value and sales of fast-food parent companies and what they post as minimum requirements to open a franchise. So, it might be best to leave the investment to those who have trouble accessing risk, whether rich of poor.
To meet the minimum liquid asset base to get a Burger King Worldwide Inc. (NYSE: BKW) franchise requires $500,000. McDonald’s Corp. (NYSE: MCD) screens differently. A franchisee must start with at least $750,000 in non-borrowed assets. Based on the value of the McDonald’s brand, and its marketing budget, why would anyone want to do business with Burger King? Although it should not be considered a tie breaker, McDonald’s has better food.
Yum! Brands Inc. (NYSE: YUM) requires possible franchisees applicants to be rich. The minimum liquid asset level for KFC is $750,000, for Taco Bell $750,000 and Pizza Hut $350,000