I’ve written several times that investing your $150,000 nest-egg in the public markets and working a reasonably fun job is an underappreciated alternative to applying it towards a franchise. This article cites a study by Vanguard’s founder John Bogle regarding a 25-year study of a diversified portfolio return that on average has yielded 9.5% annual return.
What would you hope your franchise is worth in 10 years? Does $372,000 sound good for a selling price, on top of the wages you earn by holding a typical job? The $372k is the approximately growth of your $150,000 investment in the market compounded at 9.5% annually for 10 years.
A great article on the lowest cost (0.15%) diversified publicly traded investment portfolio in the world is here
The decision to invest in and hire yourself to manage a franchise is a personal balancing test of many factors – lifestyle, family needs, risk tolerance, job satisfaction, financial goals, etc. Satisfaction of an entrepreneurial itch is typically not met by franchise ownership because of the operating requirements and restrictions in the Franchise Agreement and Manual, which also constrains your income potential. Most entrepreneurs want scheduling flexibility, tax advantages, no boss, net worth growth, ability to adapt business to maximize revenue, etc., which is minimal in single-unit franchising.