Franchises in Spain

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This topic contains 6 replies, has 4 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 7 months ago.

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  • #55538
    Profile photo of katy
    katy
    Spectator

    Now and then it is possible to see advertisements for these on the CDS. A few new ones recently. Main outlets for these are restaurants and estate agencies. Not posting about the big ones like McDonalds etc. Small ones that ask for about 7000 to 15 thousand and many ex-pats are behind them.

    A restaurant in Marbella is selling them, suprisingly the leader of the chain seems to have been fairly empty for twelve months or more. An agent in Calahonda was selling them some years ago (he needed to as he owed about 50 clients money that he didn’t have!). Needless to say all the punters who bought these franchises lost their investment.

    Not just Spain either. A British guy who ran an English type restaurant in Florida fell on hard times….solution, sell franchises to naive Brits at property shows, they all lost money and the flagship restaurant on which the franchises were sold is also closed.

    So just beware anyone thinking of going down this road, get an accountant to do due diligence on the founding company. Anyone mention the word “franchise and Spain leave as fast as you can say “Off-plan” 😆

  • #97881
    Profile photo of Anonymous
    Anonymous
    Participant

    Anything to do with business in Spain should be avoided.

  • #97883
    Profile photo of Anonymous
    Anonymous
    Participant

    I have also seen a few franchises fail here, in one case the buyer of the franchise shelled out over 100ĸ and the “business” didn’t even last a year!! I have also seen one bar that took the best part of a year to develop their premises, opened for a week then closed (permanently). Others open for 3-4 months, then fail.

    I could never understand why franchising was a good model, if you had the skills to run a type of business then surely you’d just open your own. It would cost less, and controlling costs is a key part of success in business.

    I’m not so sure that business in Spain should be avoided. But it is business, not a retirement plan for those without the skills, understanding (and experience). It seems to me that the costs of taxes & premises are very high here, yet many appear to take on this financial burdens without really understanding how the business will pay the overheads, let alone make a profit.

  • #97895
    Profile photo of Anonymous
    Anonymous
    Participant

    I could never understand why franchising was a good model, if you had the skills to run a type of business then surely you’d just open your own.

    The main reason for franchising a business is to expand a concept rapidly and into new territories. So a business like YumYum restaurants (Pizza Hut, KFC) or McDonald’s expand rapidly throughout the world by borrowing money from the franchisee. These companies are very very picky who they allow to operate one of their restaurants and the investment in terms of money and time is extensive.

    So if anyone offers you a franchise without seriously questioning your ability to run and finance the business in question it will not be worth your time or money. Rather than you doing due diligence on them they will do it on you!

    By the way if you had a failing McDonald’s restaurant, they would not let you fail rather buying the franchise back off you (at a loss of course) and find someone to take it over. I am also aware that all the well known brands (that’s the point by the way, they are well known) have a very long waiting list of people willing to become franchisees

    regards

    Paul

  • #97901
    Profile photo of katy
    katy
    Spectator

    Of course 🙂 The ones I have in mind are small time set-ups targetting ex-pats and aimed at getting a bit of cash flow for their ailing business. One I knew was a failing Estate agent in Calahonda. Began advertising franchises available all over the coast (of course they were, he was getting 7000 🙄 ). I know one set up in Coín and quickly folded. See Terra Sana is doing it now 😯

    I know someone who successfully ran a Body shop franchise, the start-up costs were very high but so were the rewards. However they weren’t what I am referring to above, different as chalk and cheese 😆

  • #97905
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Katy

    I was replying to El anciano point “I could never understand why franchising was a good model, if you had the skills to run a type of business then surely you’d just open your own” perhaps poorly. Franchising is a good model if the franchiser has a very good business with venrability, but not “small time set-ups targetting ex-pats and aimed at getting a bit of cash flow for their ailing business” i agree.

    regards

    Paul

  • #97916
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Paul,

    I was generally refering to these small franchises that I have seen in Spain. And my comments were made with that in mind.

    I can see the value to some perceived in buying a franchise with a strong brand & track record (e.g. McDonalds). However, I still feel that many would be better off going out on there own. But, I guess that’s just the way I see things, I’m sure others would disagree.

    But these small scale franchises are just a waste of money IMHO.

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