As I’ve probably mentioned before, at The Fifth Person, we prefer businesses which are simple, profitable, and preferably recurring. One of the key examples of such a business is the franchise business model.
At a basic level, franchises are simple to understand. Let’s imagine you started a highly successful business. It generates significant amounts of cash, and you can use that cash to expand. But remember expanding requires opening a new store. Renovations, electricals, wiring, etc. (Many franchises are traditionally physical businesses because a purely digital company would typically not need a franchise business model — a la Google, Facebook. However, digital franchises are also a thing).
All the above expansionary efforts require money. Lots of it. So, growth can be achieved but is slow. You can most likely expand a single restaurant at a time. But time is money. A successful restaurant concept does not take long to replicate by potentia...