Would You Sell Your McDonald’s Franchise?

Would You Sell Your McDonald’s Franchise?

During weeks like we’ve recently experienced, when market corrections occur and the value of your strategically allocated Retirement Bucket of investments declines, it’s extremely useful to put investing in perspective. 

Think about this for a moment…

Assume that thirty years ago, you took the carefully thought-out leap of faith to borrow the necessary funds to buy and operate a McDonald’s franchise (certainly a business we’re all familiar with).

Quite a leap of faith as all of your friends and co-workers thought you were crazy.  Not to mention your spouse!

After attending Hamburger University, and then suffering through a lot of bumps and bruises over the next 18 years, you reached the point where profits were good enough, and you had the confidence to purchase a second McDonald’s franchise.

Throughout the years, you’ve run your stores exactly as McDonalds suggests. You’ve carefully studied your marketplace. You’ve come to really understand and develop a level of confidence with each store’s cash flow during good and challenging economic cycles.  And your profits, while not explosive or in a straight line, have continued to rise over the years.

While it’s been anything but easy, you’re happy with the decision you made thirty years ago as owning these two McDonald’s franchises has provided a very nice income and lifestyle for you and your family.  And, it certainly appears to be able to do so in the future.

Your Big Question

What if the person I just described who owns these two McDonald’s franchises was really you?

Imagine surfing the news on-line today and reading these current headlines from Yahoo Finance and Wall Street’s MarketWatch:

  • ”If You Weren’t Yet Worried About the Stock Market, You Should Be Now”, or
  • “Monday’s Nasty Stock Market Reversal is Evidence That the Worst is Far from Over for Wall Street”, or
  • “Here’s Where Investors Are Taking Shelter from Stock Market Turmoil and Fed Hikes”

Here’s your BIG Question: Would you scramble and search for the phone number of a business broker so you could put your two McDonald’s franchises on the market to sell immediately?

After all, the market has been pushing higher and higher to all-time highs, and it certainly looks and sounds like the “bubble” is about to burst.   

Aren’t we due for a big market correction?

What if the Fed changes course and begins to raise interest rates?

What if inflation finally kicks into high gear like the late 1970s after all the Covid relief stimulus money poured into the economy?

What if the new strand of the virus all the experts keep talking about takes hold and we have to go into lockdown again?

What if the gridlock in Washington continues and they can’t get a balanced budget passed?

What then??

Would your McDonald’s franchises survive? 

With a full-blown market crash and recession all but looming on the horizon, wouldn’t it be smarter to just sell your franchises and wait this thing out?  Then, when everything settles down and gets back to “normal”, you can buy another one.

Your Likely Answer

Given everything I’ve shared with you about the owner of these two McDonald’s franchises, I’m confident that you’re laughing right now and shouting out a resounding No Way!

If that’s true for you, why not?  Why wouldn’t you sell your franchises?

Well, to start with, you’re an owner!  You didn’t buy your McDonald’s franchises so you could buy and sell in and out of them in order to gain some sort of short term profit.

Second, you’ve lived through a lot over the last thirty years.  You know what you own.  You’ve seen how they perform during up and down market cycles, and your experience tells you that the long term impact on your McDonald’s businesses from any and all of these reported “crises” is highly likely to be next to nothing.

What’s the Difference?

So, what is the difference between you owning a McDonald’s franchise as I’ve described vs. you owning any investment you currently own?

Please take a moment to pause and really give some thought to this.

The only difference is if you choose to “operate” the McDonald’s franchise, i.e. “work in the business” on a day to day business.  However, many franchise owners own multiple units and don’t work “in” the business at all.

Aside from that, it’s exactly the same. 

When we all invest, what are we doing?  We’re all buying ownership shares of various companies.  That’s what investing is…ownership

And, we own and accumulate shares in many companies because we need to own assets that have the ability to rise in value over time and generate increasing levels of income (dividends) in order for us to maintain our lifestyle in a continuously rising-cost world. 

This is such a critical distinction for your future. 

When we listen to and watch the financial media on a day to day basis, and we listen to friends, family members, and co-workers talk about investing, this is not what we hear.

We hear them talk about “the stock market” as if it’s this mysterious and scary thing. 

The “stock market” is simply a mechanism to buy and sell ownership shares in thousands of companies throughout the world. 

That’s it. 

It’s a collection of thousands of enterprises whose current value and dividend levels will each rise and/or fall over time based on their ability to generate profit and income for their “owners.”

So, when you invest, you’re not “buying” the stock market, per se.  You’re buying an “ownership” stake in one, or hopefully in your case, thousands of companies just like buying a McDonald’s franchise.

And, buying and owning shares of well-run companies is a lifelong venture for everyone who has a goal of generating income that can keep pace with the rising cost of your lifestyle.

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