The question that gets asked the most about becoming a franchise owner is always the same: “How much money can I earn as a franchise owner?” Owning a franchise in Canada offers many clear benefits to entrepreneurs that include operational support and tapping into a loyal customer base, but the issue about earnings can be more difficult to figure out.

If franchisors aren’t forthcoming with information about revenue, it’s because they are only trying to protect themselves. Exact numbers are rarely given by a franchisor because this opens up the possibility of being sued. If a franchisor promises a given figure and the franchisee is not able to achieve it, the franchisor may face a lawsuit.

However, a poll published by the Franchise Business Review is able to shed light on this obscure topic.

 

Franchise Business Review poll results 

The poll aggregated the results of 28,500 franchise owners who reported their income and other demographic data. In it, the poll found that the average franchise owner earns $82,033 per year. As promising as this is, a closer look at the poll data shows that the provided average skews a little high.

The poll shows that the top 7% of responding franchise owners earned over $250,000 per year, pulling up the average number by quite a bit. Without counting on these outliers, the actual average income for franchise owners was less than $50,000 per year, an amount that accounts for 37% of all poll respondents.

Similar results are gained when looking at certain industries of the poll. When limiting the date to food and beverage franchisees, the median annual income becomes around $70,000, and if this group focuses on startup franchisees (those in business for less than two years) the median falls to around $50,000.

As we see, top performers don’t account for the kind of experience that most franchise owners have. And yet, yearly earnings aren’t able to fully describe how franchise owners can benefit from operating a franchise of their own.

 

Building equity, building a business

Franchise owners are entrepreneurs that work as their own boss. But unlike a normal employee that draws a salary, franchisees have a stake in their franchise location.

Franchise owners typically build equity, meaning they have an ownership of a business (or part of it). Since this equity can be sold (under specific conditions), the annual income does not always show the true profitability of the business. That’s because instead of just making money, a franchise owner is also building a business.

As a new franchise owner, you’re creating a business that didn’t exist before. You’re creating new opportunities, and letting them flourish. Over time, your new business can grow to become something completely different from when it first started. And, as the franchisee, you stand to benefit from your own hard work.

 

Business profit vs owner income

Something else that prospective franchisees need to know is the difference between business profit and owner income. The profits made by a business aren’t the same as an annual income, a key fact to remember when considering the franchise owner earnings.

As the franchisee, you are responsible for balancing the books on your franchise location. Before taking care of your salary, you’ll need to take care of things like business taxes, debt repayment, and business reinvestments. To ensure that you don’t get short changed, it’s important to procure an alternate source of income (such as a spouse’s job) for the tough first year of operating a franchise.

 

Keys to determining franchise success

The amount of money that a franchise owner can make is dependent on a number of factors:

• The brand you pick: Some franchises perform better than others, for which the retail food sector ranks consistently well in a list of the top franchises in Canada.
• The brand’s franchising expertise: Franchisors with established training programs to help new franchisees get started make for a great recipe for success.
• Communicating to solve problems: Maintaining open communication between franchisor and franchisee contributes to overall success, and is in everyone’s best interests.

Are you interested in operating your bar? St. Louis Bar & Grill is looking for talented franchisees to help us in our expansion efforts! Our franchise locations have average sales of $1.7 million per unit, and we need your help to open new locations! Find out how you can become a St. Louis franchise owner on our website! 

Apply to become a franchisee today!