Pay Yourself

Q: When starting a franchise, do you continue to work or do you take out a loan that will cover all of the franchise fees as well as your salary for a year?
— G. Jackson, Alabama

A: Though the franchise system is designed to offer you ongoing support, managing a franchise is a full-time job that will require a salary that covers all your personal expenses.

You will need enough money to not only start and run your franchise but to sustain yourself until it is profitable. Once you’ve decided where you will get your loan or startup capital, work with your CPA to prepare a cash-flow projection that will determine how long it will take your franchise to break even and turn a profit. You may not be able to draw a salary for the first few months your franchise is operating, so make sure you have enough capital to provide for your personal needs.

Your financial projections should include a salary for the present and the future. Start by figuring out what your family budget will be. Take annual expenses — medical, clothing, recreation — and regular expenses and divide them equally into monthly portions. This financial breakdown will help determine the salary you’ll need.

For more information on owning a franchise, access our Franchise Finder at Also, check out our annual roundup of the top franchises for African Americans in our September issue.