Self Directed 401k
Buy A Franchise With Your Retirement Funds
Franchises are sometimes included as options for traditional IRAs, but more often than not you need a self-directed IRA to take advantage of a good franchise investment.
A major concern of buying and operating a franchise with an IRA is the payment of set-up and operating expenses. Since all expenses must be paid with IRA funds so you need enough cash in your account to do so.
The decision to buy a franchise is often a hedge against the uncertainty of starting a business from scratch. Your product is established for you, and much of the work of targeting your desired demographics, and marketing to them is done for you. If you choose a good franchise, your brand identity will already be well known and people will know at a glance what business you are in and will have a positive reaction.
In return for all of the work that the parent company has put into making your franchise successful, you pay a start-up franchise fee and a percentage of the profits. Essentially, by opening a franchise you become a type of partner in the company. This partnership means that the parent company’s fortunes directly affect your franchise. In this way, your fate is not entirely or directly under your control.
Franchise fees vary with the franchise. Brands that are recognized worldwide are obviously going to be more expensive than brands a notch or two down. As with any other investment, if you buy your franchise at just the right time and the parent company experiences an unprecedented period of success, you can enjoy some of the fruits of that. People buying franchises after you will likely have to pay much more than you.
The self-directed IRA is a viable and established funding solution to purchase a franchise.
