Becoming a franchise owner is a powerful way to increase your earning potential and future investment opportunities. Better yet, it might not be as out of reach as you think.
A lot of people think that you need to be a successful and established businessperson to become a franchise owner. The reality is that there are a lot of inexpensive franchise opportunities meant to be available to as many people as possible. These low-investment opportunities are a fantastic chance for people from all walks of life to become businesspeople running one or more successful franchises.
Here’s how you can do it.
Advantages of starting a franchise business with low investment
Franchises come with a lot of opportunities, and starting an affordable franchise can be one of the better ways to get into the business world. Here are a few of the key advantages.
You start with an established brand
One of the most difficult parts of running a business is establishing a brand and learning how to market to your core customers. But when you open a franchise business, things are a little different. You start with an established brand in place, and at least some brand awareness already exists with your core customers.
That doesn’t mean that you won’t need to market to your ideal customers, but it does mean that the marketing will be easier and that you won’t have to court customers and clients as much to win their business.
There’s already a roadmap for success
If you’re new to running a business, low-cost franchises are a great place to start. That’s because successful franchise businesses already know how to take this business and create success from them.
You won’t be blazing a unique trail in search of profits. Instead, you’ll be adapting recommendations and proven techniques to suit your location and market. Chances are you’ll not only have known techniques for success but a detailed roadmap of how to establish your franchise location, what kind of locations to look for, how to get your first clients, and how to overcome common challenges with this business model.
That doesn’t mean that you need to follow that roadmap exactly, but it does mean that you have some assurance of success if you follow the proven process.
Lower risk
Starting a franchise also comes with a lower overall risk than starting a brand-new business. For one thing, you have a lot more support, and you’re tapping into an established opportunity. You don’t need to spend as much on marketing, establishing a brand, or creating things like a logo to be successful. That means you aren’t spending as much to start your business as you would starting from scratch.
In addition, when you open a franchise, you’re going to have some ready-made customers from the word “go.” Take a McDonald’s franchise as an example. People know and recognize McDonald’s, they have specific expectations for each location, they understand the menu, and there are plenty of existing customers. So long as your location is well placed and doesn’t disappoint customers with slow service or limited menu options, your risk of failure is low.
Better yet, since many franchises know how much you need to spend to be successful and provide key performance markers so you know what good, reasonable goals are for that business, you’ll know whether your franchise is working quickly.
All of that combines to lower your risk from the business and give you more opportunities to intervene before your franchise fails.
Management and marketing assistance
The company behind any franchise owner also has an incentive to make sure as many franchise locations as possible are successful in the long term. That means that those companies are incentivized to offer management and marketing assistance, especially to new franchise owners. That might look like providing ready-made marketing materials, offering management courses for your team to take before you get started, or other forms of assistance. Regardless of what form the assistance takes, it will reduce the time and money you need to spend to get high-quality marketing material and skilled managers.
Lower capital requirements
The last and most important advantage of starting an affordable franchise is that you don’t need as much money to launch a franchise location. That means that this is a more accessible business opportunity available for a wider range of people. You don’t necessarily need to be rich to open a franchise.
What counts as an affordable franchise?
There are a few different costs associated with becoming a franchise owner. Inexpensive franchises need to have low costs in all of these categories to really count, though some have more affordable fees than others.
The other thing to consider when you’re choosing between affordable franchise opportunities is that lower costs often mean less support or less valuable resources. You’ll still get some help with your new franchise, but probably not as much as a more expensive alternative would offer.
The different costs associated with a franchise are:
- Franchise fee: This is the basic fee you’re required to pay to become a franchisee. Typically a one-time upfront fee, this can range from a few hundred or thousands of dollars all the way up to millions.
- Upfront investment costs: These are the miscellaneous costs associated with acquiring a space, putting together marketing materials, the initial cost of hiring and training employees, and gathering any other resources you need to start your business.
- Ongoing investment costs: This is the ongoing cost of operating your business, like paying for employee wages and benefits, space rental, materials and supplies, and the cost of utilities. Ideally, you should have a few months of ongoing costs set aside when you start your business, so you have time before you need to turn a profit.
- Personal finance requirements (optional): Some franchises, including the most affordable ones, have requirements for the personal finances of the owner, either as net worth requirements or liquidity requirements. Basically, this barrier to entry is a way for the business to ensure that new franchise owners have the resources needed to be successful rather than letting people buy in and fail if they need more money than they expected.
With all of these costs put together, you should expect to spend $20,000 or more to get started. However, that doesn’t mean you need to have all that money on hand right now. Business loans and other financing opportunities are available for qualified individuals.
Even the least expensive franchises aren’t necessarily low-cost, but they are some of the most affordable and potentially lucrative business opportunities.
Types of affordable franchises
Affordable franchises can be found in just about any industry, but some industries are more likely to have less expensive franchise opportunities than others.
Having industry experience before you start your franchise can be a huge bonus and can shape which industries you explore when you’re considering which franchise opportunities are a good fit for you. These are far from the only industries that have affordable franchise opportunities, but they are good examples with a lot of known franchises.
Office and commercial cleaning services
Cleaning services, in general, are a huge industry, but establishing your name is one of the bigger challenges that comes with starting a cleaning business. Using a franchise gives you a ready-made name and can help you win the first few contracts, no matter what kind of cleaning service you choose to offer.
Travel planning
Travel planning is a huge industry with a lot of different kinds of travel planning you can get into. This type of franchise can have a bigger barrier to entry since you need to have a travel specialization or specialized employees, but there are a lot of opportunities here as well.
Real estate
Real estate is needed in every market, and there is a range of specialty areas that you can work within. Like travel, you do need some specialization either yourself or from your employees, but, also like travel, there are a lot of experienced professionals in the field and a lot of training opportunities. Starting a real estate franchise with a trusted name can make it a lot easier to jump into this industry and make money.
Tutoring
Anywhere there are families, there are parents and families interested in paying for tutors for their children. Even college-age students and some adults will pay for high-quality tutoring services, and having a trusted franchise name behind you is a good way to get started.
Restaurants
Restaurants might be the most common franchise opportunity out there, and you can choose from many different kinds of restaurants and cuisines. Some of these are the most affordable franchises you can get, while others are among the most expensive.
Affordable franchises you can start with
Here are a few affordable franchises you can start with, though you can always look for more options through Franchise Direct.
- MaidPro
- PhoenixEcom
- Junk King
- Five Star Painting
- Taco Bell
- Glass Doctor
- Jazzercise
- Dream Vacations
There are literally hundreds of opportunities out there; it’s just a matter of choosing the right franchise for your needs and experience.
Tips and tricks for starting affordable franchises
Here are some tips and tricks to help you get started with your own franchise and to make sure you’re in a good position to get started.
Talk with other local franchise owners
Talking with other franchise owners, either in your industry, in your area, or both, is a hugely valuable way to learn about the industry. Talk about the challenges they’ve faced, what kind of budget they needed when they got started, the most serious hurdles, whether they were able to find quality employees, and other details of the business.
Even a franchise owner in a different industry will be able to speak to a range of different shared challenges you’ll need to overcome.
Do your homework first
Make sure you’re familiar with other similar franchises in your area, tax requirements, loans and grants available to small business owners, and local employment law so you know what standards you have to meet and how you can meet your financial obligations. If you’re at all curious about it, research it before you get started.
Don’t neglect marketing
One of the most common mistakes new franchise owners make is failing to do enough marketing work to attract the customers your business needs to survive. You should have plans for how to attract your first few clients to any business, what kind of marketing you’re going to do, and what kind of marketing materials are already available for you to use in your business.
Consider outside sources of funding
Don’t forget to investigate other sources of funding when you’re getting your business started. Look into small business loans, grants, and other sources of starting capital to help get your business off the ground and get the money you need for the first few months of operating costs.
Create a business plan for any franchise you consider
Having a business plan in place for any franchise you seriously consider can also help give you the confidence you need that you’re ready for the business and that you know how to make it successful. A business plan can also help you identify gaps or additional funding you need before you get started so you don’t accidentally rush things and put yourself in a worse financial situation in the process.
Ready to buy a franchise of your own?
If you’ve read through this article and think you might be ready to take on a franchise business for yourself, congratulations! Franchises are a lot of work and responsibility, especially when you’re getting started and finding a management and employee team that work well in this business. But the long-term benefits of being a successful franchise owner more than justify the upfront costs and time commitment.
Just remember to take your time, do the research, and pay attention to what the market needs. Location and market demand both have a huge impact on the potential success of a franchise business. If you keep locations, costs, and your own expertise in mind, you’re a lot more likely to launch a successful franchise — maybe even the first of many franchises.