Challenges of Starting a Franchise Business for Beginners

For beginner franchisees, understanding investment recovery period and accurate calculation is crucial for avoiding financial disaster.

### Challenges Faced by Novice Franchisees
Novice franchisees typically have a limited investment budget, making it challenging to recoup initial costs. The deposit and facility expenses are difficult to recover, especially if the new owner plans to change or update the operations. With a total investment of around 120 million won, including key money and facility costs, novice franchisees face significant financial pressure to make the business profitable, often requiring immediate cash flow after investing.

### Financial Preparation for Opening a New Store
Opening a new store may require around 16 million won for living expenses, rent, and initial investment before the location is finalized. Additional costs after acquiring the store, such as demolition, signage, and utilities, can amount to approximately 15 million won. Unexpected changes in furniture and layout may also lead to extra expenses for the new business.

### Additional Costs for Remodeling: Breakdown and Total
An additional 9 million won is needed for the kitchen, including the dishwasher, refrigerator, shelves, and kitchenware. The installation of folding doors will add another 5 million won, and a deck will cost 3.5 million won. Replacing the old door with a new one will require 1 million won. In total, the separate costs amount to 29 million won, with an additional 2.9 million won for value-added tax, bringing the total additional cost to 32 million won. Additionally, the installation of air conditioning for a 20-pyeong space will cost another 5 million won.

### Challenges and Costs of Opening a New Business
The initial setup costs for the business are much higher than expected, leading to financial struggles in the first few months. Unexpected expenses, such as additional facility costs and taxes, significantly impact the overall investment required. Even after the business is opened, the ongoing living expenses and operational costs continue to be a financial burden.

### The Struggle of Starting a Franchise Business
Saving 5 million won per year leads to a total of 180 million won after three years, but the reality of paying back debts and taxes makes it difficult to recoup the investment. The pressure to consistently make a 10 million won monthly profit from the first year, and the potential risk of a downward market turn, adds to the financial challenge. Starting a franchise often involves naively seeking a better life, while the increased financial responsibilities and fixed costs can make it difficult to manage expenses and debts.

### The Challenging Journey of Running a Business
The business initially shows promise but starts declining after the first year, leading to financial struggle. Taking out a loan and the risk of the brand becoming outdated contribute to increasing debt and diminishing security. The escalating costs, potential demolition expenses, and other financial obligations can ultimately lead to a disastrous situation for the business owner.

### The Harsh Reality of Franchise Investment for Beginners
* 💰 The initial investment for a franchise typically ranges from **200 million to 300 million won**, including key money, facility costs, and additional expenses.
* 🏦 New franchisees often struggle to **recoup their investment**, with many unable to **fully recover their initial costs**.
* ⏳ The investment recovery period is often longer than expected, with some estimates suggesting it could take up to **3 years to start seeing profits**.
* 💸 Additional hidden costs, such as **signage, electrical work, and interior design**, can significantly **increase the total investment amount**.
* 🏢 The process of finding a suitable location, negotiating contracts, and setting up the store can take several months, during which **expenses continue to accumulate**.
* 📊 Franchisees must consistently generate a **net profit of 10 million won per month for 3 years** to recoup their investment, a challenging task in a competitive market.
* 🔒 Taking out additional loans to cover expenses can further increase financial pressure, potentially leading to a **cycle of debt**.
* 🚨 The video emphasizes the importance of **realistic financial planning** and understanding the **true costs and risks** of franchise investment for beginners.

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