You’ve undoubtedly been hearing more about women’s sports this month, from record viewership for the Women’s Final Four to the pay equity fallout from the WNBA draft. Even Hoda and Jenna are fired up! When they’re talking about equal pay on The Today Show’s frothy third hour, you know it’s a thing.  

Since 2022, you may have seen stories like this and this about women cashing out their 401ks to open sports bars that exclusively feature women’s sports broadcasts. This week, Portland’s The Sports Bra got an investment from Serena Williams’ husband (Reddit co-founder Alexis Ohanian) to become a global franchise. 

Before you liquidate your IRA, let’s be clear: I am not encouraging you to flip your life’s savings into a women’s sports investment. Instead, I would like to use this delightful development to introduce you to the basics of franchising. 

What is franchising, anyway? 

While many of my readers have started a business from scratch, that idea overwhelms many would-be entrepreneurs. However, you can both benefit from a franchise model. Founders can lessen the risk of expansion by letting other people do the work and invest their own money. Franchisees skip the trial and error to buy a ready-made business concept with an established brand name.

Let’s go a little deeper on establishing a franchise, in which you license your concept for expansion. If you read The Sports Bra story and thought, hey, I’d like to do that, there’s a set of steps to establishing your brand as a franchise. This legal guide is a great place to start, outlining both the upsides that will get you excited and the risks and downsides that might show this isn’t the right path for you. You’ll quickly see the importance of owning and defending your intellectual property like trademarks, copyrights, and trade dress. You’ll also need a repeatable operations guide. You’ll package everything up and set a franchise fee. Franchisees pay you up front and periodically (in royalties) for a license, use of your intellectual property, your leadership and support, and access to suppliers and partners.

On the other side, if you’re loving the idea of opening a location of The Sports Bra, you’ll want to see a franchise opportunity summary. (Here’s a good example from Heyday, a facial bar I visit monthly to keep my freckles in check.) What kinds of obligations are you taking on, and will the company offer financing? What are the build-out requirements? How do the royalties and ongoing fees work? What kind of marketing and training will they provide? Can they park another franchise down the street from you, or are you buying territorial exclusivity? Once you decide which franchise to join, you’ll hire your own team, lease your own space, and run the day-to-day of your business. But you’ll have the benefit of joining an established brand that will hand you a playbook and support your success.

If you’d like to explore franchising, Entrepreneur Magazine is a great place to start. Their annual Franchise 500™ report evaluates the value and estimated profitability of US franchise opportunities. While fast food often comes to mind, the list includes cleaning companies, preschools, industrial tools, advisory and consulting firms, med spas, dog boarding, and elder care. To get hands-on, attend the annual National Franchise Show, with seminars on how to establish or buy a franchise and meet-ups with corporate teams and investors. This year’s show is May 4-5 in Las Vegas, and expo tickets are still available.

If you’re all-in on bringing The Sports Bra to a strip mall near you, request more information from the founder using this email address. I look forward to visiting your location to cheer on Angel City and sip some biodynamic Oregon wine.

Spot Poll Results: Paying Yourself

The results from last week’s poll say that it’s going okay, but you’re not crushing it yet. 

Thanks to one of our readers, a bookkeeper, who pointed out that many of her sole proprietors clients fall into this tax trap:

“I see this misconception in my bookkeeping practice all the time: ‘If I don't take the money out, I won't get taxed on it.’”  

Profits are subject to income taxes, even if you leave them in your business bank account. The draws you take are also subject to payroll taxes. The payroll taxes can be paid by the business and will reduce your taxable profits, but you still owe income tax. Taking a smaller draw will reduce your payroll tax bill, but exempt your profits from income taxes. In other words, there are two kinds of tax and you are subject to both. If this still feels clear as mud, visit the IRS self-employed tax center or talk to your trusted tax partner.

Who loves a tax credit? You’re probably missing some federal tax credit opportunities, like the small employer 401k credit, which encourages you to provide a retirement plan by paying some of the expenses for the first three years. Or the $9,600 credit for hiring someone who’s been long-term unemployed or is leaving the military. A tax credit subtracts from what you owe, versus reducing your taxable income, so it’s a bigger deal than a deduction. Check out this summary of commonly-missed credits from the SBA and The Hartford.

Is that college worth the money? I love finding a hidden value, and the Bloomberg college ROI report did not disappoint. Many STEM-speciality schools wildly outreturn relative to their tuition. You may not know these colleges, but the industry does. And many prestige public schools crush the Ivy-adjacent tier. If you want to see where your alma mater or your kid’s prospective one currently stacks up, check out this handy ROI generator and bubble graph. 

Last days: apply for the 2024 Inc 5000. If you just closed your 2023 books for tax day, take another look at whether you qualify for the Inc 5000. Applications close on April 26. Apply here. If you showed at least 35% growth over this three-year period, there’s a good chance you’ll make the list. (Here’s 2023 as reference.) You must meet all of these requirements: 

1. Have generated revenue by March 31, 2020

2. Have generated at least $100,000 in revenue in 2020

3. Have generated at least $2 million in revenue in 2023

4. Be privately held, for profit; based in the U.S., and independent (not a subsidiary or division of another company)

All list qualifiers are included in Inc Magazine’s print and online editions and regional press releases.