The 3 Elements of Being Wealthy Being wealthy isn't solely about having a lot of money — it's about having a quality of life that affords you time to do the things that matter most to you.

"Wealthy" is a subjective and relative term. Many people say having $1 million in the bank makes them wealthy, but some only need $100,000 and some need $100 million. In some parts of the world, you're considered well-off if you have your own cow. It all depends on your desires, your expectations, and where you live. I live in Los Angeles, California, and my brother lives in Greensboro, North Carolina. My house is worth twice as much as his, but it's half the size. If I were smarter, I'd invest in real estate here and live there.

But even if you meet your financial expectations, you must also consider the cost of building your wealth. The most basic report in business accounting is the P&L. The top portion of the P&L lists all revenues. The total amount of revenues is meaningless until you subtract the bottom portion of the P&L, your expenses. The expenses tell us how much it costs to achieve the revenues. The difference between the two is your profit or loss. But that bottom portion, the expenses, only tells us about the financial costs of the revenues. It doesn't tell us about the time that was invested.

Related: Explore great opportunities on the Franchise 500

It doesn't tell us how much stress was endured. It doesn't tell us about the strain the business puts on your health and your relationships. If you're working seven days a week and sacrificing all quality of life to stockpile cash, I don't care how much money you have. You're not a wealthy franchisee. You can always make more money, but you'll never get more time. I don't want an ulcer or a divorce. I don't want to miss the opening of the newest Marvel movie. And if getting rich means missing my kids' games and recitals, count me out.

On the other hand, basketball shoes and ballet slippers cost money. So do car payments, gym memberships, and dog food. I want to be able to pay my kids' college tuition, buy more cool stuff, go out to dinner with my wife, and see the world. I want to give a lot more to charity and secure my retirement. Mostly, I don't want to worry about money. When you buy a franchise, you're getting more than a business. You're acquiring a lifestyle. You'll have more responsibility, more liability, and more surprises than any job you've ever had. And unlike a job, you can't just quit. You're on the hook. With a commitment like that, you'd better like what you'll be doing. You need to have a passion for frozen yogurt, haircuts, or home care for seniors—or for some aspect of providing these products and services. You'd better be excited about how you're going to spend your time because you're about to spend a lot of it.

But that's the reward! You actually get to spend time doing something you enjoy. You get to make money working for yourself. If you like what you do, then the time you spend on it won't be a sacrifice. And if you're smart, you'll have plenty of time to do everything else you want, too, even if that's working on another business. For the purposes of this article, the term "wealthy" refers not to a dollar amount but to a lifestyle. Wealthy franchisees are those people who build businesses that 1. make money, 2. free up time, and 3. maximize quality of life.

1. Making Money

Without a doubt, there is a financial aspect to being wealthy. I'm not saying being rich is more important than being loved. I'm not suggesting that making money is more important than making a difference. You shape your own values. But making money does allow you to have more choices. And if you balance this component with the other two (time and quality of life), you'll have enjoyable wealth. So how much is "a lot of" money? That's subjective. I can't name a number to define financial wealth for you. You should have an idea of the kind of money you can make in your particular business. Some might say they just want enough money to be happy. So how much is that? There's actually an answer to that question: $75,000.

Related: Discover 5 Top Retail Franchise Opportunities to Invest In

Princeton University's renowned psychologist Angus Deaton and Nobel laureate psychologist Daniel Kahneman analyzed more than 450,000 responses to the Gallup-Healthways Well-Being Index. They discovered that $75,000 annual household income is the threshold for increases in emotional well-being, even among those who live in more expensive cities. The comforts afforded to those earning above that amount yielded little or no increases in happiness. Those who achieved higher degrees of emotional well-being got it from other sources. Maybe you don't believe the experts. That's OK. Try it for yourself. There's a good chance you can make more than $75,000 from your franchise, although you may have to adjust the number for inflation. (The Princeton report was published in 2010. In 2020, the number is probably closer to $90,000.)

Prior to selling someone a franchise, franchisors are required to disclose everything about their company in their franchise disclosure document (FDD). Item 19 of the standard FDD provides details on the financial performance of a franchise. It may provide earnings ranges, historical performance, costs, and other relevant information to give prospects an idea of their potential ROI. But Item 19 is optional. Many franchisors are reluctant to share this data. This may be because the numbers are low (sometimes skewed down by the worst-performing franchisees). For most franchises trading in U.S. greenbacks, top operators are pulling in around six figures of profit per unit on the high end. Many franchisees make millions of dollars by running multiple locations. Some of them are large corporate entities running hundreds of units, sometimes from multiple brands. It's up to you to set your own financial goals. To keep it realistic, you may wish to aim for a percentile within your system, such as being in the top 10 percent of all franchisees in sales. You may also wish to include an annual rate of growth. Look to your franchise system and your industry to determine the average growth rate. Most importantly, set goals for profit. What matters most is what you take home. Of course, in evaluating your revenue, you also need to consider how long it takes you to generate it.

2. Control of Your Time

I once asked an audience of franchisees to raise their hands if they'd be happy making $1 million from their business. Most raised their hands. "Let me finish my question," I cautioned. "How many of you would be happy making $1 million from your business over the course of 25 years?" Most hands went down. They were working way too hard to make only $40,000 a year for the next 25 years. I asked another question: "How many of you would be happy making $1 million in a year if it would cost you your family, your friends, and reduce your life span?" A few hands went up, but not many. There's an important relationship between time and money. Making $70,000 by working part-time may be a smarter model than making $100,000 working full-time. This is especially true when the time you save is invested in a second business, whether it's an additional location or another business altogether.

Some franchise systems require franchisees to be full-time operators. I understand this policy. They don't want passive investors who aren't committed to building the business. At the same time, the entire concept of franchising is to create replicable systems that aren't dependent on any one person. It's all about scaling. As they say in the industry, if you only buy one location and run it yourself, you haven't bought a business. You've bought yourself a job. The best franchisees make themselves as unnecessary as possible for day-to-day operations. That's not neglect—quite the contrary. It's the ultimate form of leadership. Great leaders breed more leaders. They create an infrastructure that frees them to focus on more important things. They invest a lot of time upfront so they have more free time later.

Related: Building a Strong Corporate Culture for Lasting Franchise Success

Smart financial investments yield more money. Smart time investments give you more time. I opened my first Edible Arrangements franchise with the intention of not needing to constantly be in my store. I could have saved on labor and maybe increased my revenues by running the franchise myself every day. However, my objective was to run it part-time while maintaining a slightly reduced speaking schedule. The net result was a significant increase in my annual income from multiple revenue streams, one of which was a tangible asset that would increase in value.

To accomplish this, I had to work smart, create systems, develop my team members, use technology, and focus on what mattered most. My work had to make money and save time. It worked well for us. Even though I wasn't always there, we still became one of the highest-volume locations in the state. We earned stellar reviews for customer service and became a training store for other franchisees. We opened a second location and built that up as well. A smart time investment doesn't necessarily mean full-time. It means full commitment. There is nothing more valuable than time. We can always make more money, but time is something we'll only have less of. It's precious. It's like a bank account from which we only make withdrawals. None of us knows our remaining balance. All we can do with time is choose how we spend it.

Like financial wealth, I can't determine how you should spend your time. Some people love family time while others want solitude. Some people want an active social life and others just really love to work. Only you know what makes you happy. The important thing is that wealthy franchisees have options. They're in control of their time. They can work 80 hours a week on their business if they want, but they don't have to. They're happy with the money they make given the time they invest.

Quality of Life

Finally, we need to look at what your life is like with this business in it. Are you having fun, or are you stressed out? Do you feel proud of what you do? Does the business contribute to your life or take away from it? These are important questions to ask. And over time the answers might change. Wealthy franchisees live well and their business helps them do it. They may really enjoy the work itself, or perhaps they love the things the business allows them to do. Honestly, I wasn't passionate about fruit, but I really liked being in the special-occasion business. People just lit up whenever they saw our fruit arrangements. At parties, they would gather around a basket and moan with pleasure as they bit into a juicy chunk of pineapple.

I felt deep pride on a busy day watching all the activity in my stores. Employees were buying clothing for their kids with money they made by working in my business. Customers would hide engagement rings in boxes of our chocolate-covered strawberries. And the more experience I gained by owning and working in this franchise, the more material I had for my speaking business. The professions complemented each other. I had bad days and plenty of problems as a franchisee. If you had caught me on the right day in the wrong mood, I would have handed you the keys for free. (I'd say the same thing about my kids.)

Invariably, though, those moments passed. Most days were good. Generally speaking, having the business made my life better. (Also true of my kids.) I reject the notion that work is something to be endured. Sure, we must all pay our dues. But there's a difference between hard work and suffering. When my son's basketball coach asks him to run five more "suicides," he's working, but he's not suffering. Running suicides is a pain he appreciates because it's part of the training process, and he feels great when he's done. But a receptionist who is verbally abused by her boss, feels her work is meaningless, and goes home each night in tears—she's suffering. Remember, you're not just investing in a business. You're buying a lifestyle. Owning a franchise should make your life better. Wealthy franchisees are happy people living full, rich lives, and their business makes it possible. To be wealthy is to balance money, time, and quality of life in a way that works for you. If you can remember this, you'll sustain your success a lot longer.

I've asked a lot of franchisors to tell me about their "top franchisees," and it's always interesting to hear their criteria for "top." Some mention the franchisee with the highest-volume unit. Others choose the operator with the most locations. Multi-unit operators have sophisticated operations and generate a lot of revenue for the franchisor. That gets them a lot of attention, but it doesn't necessarily qualify them as wealthy franchisees. I met one multi-unit franchisee who had one of the biggest enterprises in the company. His combined stores generated $6 million in sales annually. His franchisor loved him for that, touting him as an exemplary franchisee. But he confided to me that the profit of all his locations put together was less than what many good single-unit operators generate. He had much more responsibility and little to show for it. Some years, he actually lost money. I recommend a multi-unit operation. It's the best way to make big money. But it starts by performing well at the unit level, and that requires high-level thinking.