Why your 'profitable' franchise might be worthless

Many franchise owners focus on the wrong number. 

They optimize for monthly cashflow—how much they can pull out of the business each month. 

And it makes sense! Cashflow feels safer. 

You can see the monthly deposits. You can pay yourself immediately. 

But there's a different approach that builds real wealth: treating your franchise like an asset you're creating, not just a source of income. 

Reinvesting profits, hiring before you "need" to, spending money on systems and people. 

Take Derek, a Mathnasium owner who we interviewed on the Franchise Secrets podcast. He recently grew from 4 to 7 locations. 

During his expansion phase, his books showed minimal cashflow.  "The last two years haven't been tremendous cashflowing years because we've been adding centers pretty rapidly," Derek explains.

He was reinvesting everything—hiring leadership teams, adding systems, opening new centers. To the inexperienced, this would look like poor performance. Derek saw it differently.

He stopped optimizing for monthly income and started building enterprise value. 

As a result, Derek's business doesn't require him to be there daily. 

His wife handles marketing. He has center directors at each location. He's built systems that run without him. That's not just cashflow—that's an asset.

Cashflow thinking asks "How much can I take out this month?" 

Asset thinking asks "How much will this business be worth to someone else?"

"I'm finally starting to turn the corner and think, okay, what is this going to become one day?" As a result, he's built a business that generates wealth while giving him time with his daughters, travel with his wife, and NASCAR weekends with friends.

Can your business run without you for a month? Six months? A year? 

If not, you don't own an asset. You own a job with higher overhead.

See you next week,

Erik

PS: Derek isn't the only operator thinking this way. Our private Facebook group is full of franchise owners sharing real strategies for building assets, not just chasing monthly deposits. Join the conversation with other operators who understand the difference between owning a business and owning a job. Join the Franchise Secrets Facebook Group here.