Purchasing stock in a franchise
Purchasing stock in a successful franchise may be more affordable than you think—and well-established brands generally offer a more secure investment than other companies. Because franchises have multiple outlets, a failure in a few individual cases is less likely to threaten the financial stability of the company as a whole. But do your homework. Share values can go down as well as up, so there’s always an element of risk, and you should always understand the terms and conditions fully before parting with your hard-earned cash. For example, there are differences between how public and private companies operate. Some companies only sell shares through their own trading company, and some require a minimum investment.
Although it’s possible to purchase shares directly, such as via an online share dealing site, consulting a professional financial adviser or stockbroker will help you make informed decisions—see here for what you should know before choosing a financial advisor.
You’ll also need to know what a share dividend is: It’s the amount of “profit” made on each share over a period of time. The exact amount is decided by the company directors and usually paid quarterly. Dividends can be in the form of cash, stock, or a scrip (certificate of guarantee).
Entrepreneur.com publishes the Franchise 500 ranking annually, based on a variety of factors, including financial strength and stability. So if you’re looking to invest in a franchise, this could be a good place to start. Let’s take a look at some of the most well-known franchises you can invest in.
(All financial information taken from Yahoo Finance on January 5, 2018.)
Who’d have thought that three college buddies opening a shop selling coffee beans in Seattle would lead to a worldwide franchise? Starting as a single outlet in Pike Place Market in 1971, Starbucks grew under the leadership of CEO Howard Schultz to become one of the world’s most successful coffee shop chains, netting over $22 billion between 2013 and 2017. Did you know Starbucks’ prices vary around the world? See where the most expensive Starbucks is.
Stock symbol (unique stock market ID): SBUX
Share price: $58.87
Five Year Average Dividend Yield (the five-year average of the dividend paid on each share): $1.34
Forward Annual Dividend Rate (the predicted dividend rate per share for the coming year): $1.20 (2.04% of stock rate)