Money
Franchise owner who sold for $1.8m warns of personal guarantees and minimum royalties
My First Million
Asking 3 young millionaires how they make $1.8M, $5M, & $12M/year
""The a lot of people don't realize franchise agreements also have a personal guarantee where you owe them royalties every month as a percentage of revenue. I think most people know that with franchises, but there's minimum royalties, which means you either pay some percent of your revenue or this fixed amount on a schedule, whichever is higher.""
Kevin says he sold his Smash My Trash franchise business for $1.8m after roughly four years, describing it as a "starter business" that became psychologically heavy due to debt and contractual obligations. He says he carried multiple personal guarantees: SBA-backed loans used to buy trucks, plus a 10-year franchise agreement that, he claims, included minimum royalty payments regardless of performance.
From this episode
My First Million