Are low-cost franchises all they seem?

How does the old saying go? If it looks too good to be true, it probably is. Well, low-cost franchises could be the exception to the rule.

Affordable franchises really do give you the opportunity to reap the rewards of the franchise business model without breaking the bank. There are thousands of franchises that you can choose from, so you’re bound to find one that suits your skills, passion and bank balance.

Here are some things you should consider before becoming a franchisee of a low-cost franchise.

You can start small and grow at your own pace

One of the key benefits of affordable franchises is that you can choose to progress your business ownership as quickly or as slowly as you like. Many of the smaller franchise investment opportunities tend to be based on part-time hours or can be run flexibly around other commitments.

You may decide that this level of dedication to your new venture gives you enough of an income to continue in the long term. You may be able to achieve the ultimate work-life balance – something that is difficult to accomplish as an employee or an owner of an independent business.

If you are a parent, you may want to become a franchisee when your children are young. This means that by the time they start school, you’ll have the confidence and time to increase the hours you put in and benefit from the bigger profits.

A part-time franchise may also be the perfect solution if you want to try out the franchise business model before giving up your job. You may be able to invest in a cheaper franchise that you run alongside your existing job. If you see the potential for its scalability, you could choose to hand in your notice and give your franchise your full attention. This is a much less risky route to business ownership – and one that will be welcomed by individuals who lack confidence in their abilities.

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It’s less of a financial burden

Most budding entrepreneurs think that becoming a business owner is out of their reach from a financial perspective, and so never get to make their dreams come true. Low-cost franchises give a wider variety of people the chance to have a taste of being the boss without the hefty price tag.

Not only is the initial franchise fee more reasonably priced for many prospective franchisees, but the ongoing costs are often much lower too. In fact, some smaller franchises don’t even charge any royalty fees, meaning that you’re likely to become profitable much quicker than many other franchisees.

Also, most affordable franchises come with lower overheads. Very often, these businesses can be run from the comfort of your own home. This saves money on expensive rental and commuting costs. The flexibility of these models will also give you control over your schedule, allowing you to work around your family commitments and saving you money on expenses like childcare.

You still get all the benefits of a costlier franchise opportunity

You may be paying less to become a franchisee, but you’ll still enjoy all the benefits that the franchise business model has to offer.

You’ll invest in a business with a proven track record of success. It is likely to have been tried and tested by many other franchisees before you. You’ll receive training and support from your franchisor and experience the advantages of being part of a recognisable brand.

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Remember: you’re still entering a legally binding contract

There are lots of benefits to becoming a franchisee with a smaller, more cost-effective franchise. But it’s important that you don’t become complacent just because the financial risk is low compared to some other franchise opportunities. You still need to ensure that you do your homework.

• Research the opportunity. Even if you’re not investing a huge amount of money in a franchise, you’ll still be investing five years or more of your life. You need to complete thorough due diligence to ensure that you’re buying the right franchise – affordability isn’t the only factor you should consider.

• Review the franchise agreement carefully. It doesn’t matter how cheap the franchise is, the obligations set out in the franchise contract are legally binding – just as they would be for a more expensive investment. Consult a solicitor that specialises in franchising to review the terms of the agreement so that you understand what you’re signing up to.

• Scrutinise the numbers. There is more to franchise costs than the initial fee. Make sure you review the fees section of the franchise agreement so that you’re aware of any other expenses associated with the business. It’s pointless choosing a franchise based on the low franchise fee if the ongoing fees are high. Also, bear in mind that your franchise may take a while to make a profit, so you’ll need an element of working capital to keep the business running and cover any personal expenses.

• Be happy. Don’t fall into the trap of selecting a franchise just because you can afford it. Your new business venture will still take hard work and dedication. Unless it gives you a sense of job satisfaction, you may end up resenting your investment – however small.

Enjoy your franchising journey on a budget

If you’re attracted to the benefits of low-cost franchises, you could have the best of both worlds: a successful business and a healthy work-life balance. Here are some tips on how to get the most out of the opportunity.

• Be prepared to work hard. Very often, low-cost franchise opportunities require an element of business development to get them off the ground. This means you’ll be armed with all the tools to generate sales, but you’ll need to put the work in to build your customer base. Buying a franchise isn’t a guaranteed ticket to success, but if you put in the effort, you’ll build a lucrative business.

• Stick to what you’re good at. Unlike some bigger brands, there may not be as many opportunities to access training in the industry you choose. Although you’ll receive all the support you need to get your new business off the ground, having experience and skills in the area of your franchise investment will be a huge advantage.

• Don’t be tempted to do your own thing. However big a business is, the franchise system is there for a reason. Usually the system will have been established and proven to be a success. Deviating from the guidelines set out by the franchisor is likely to jeopardise your chances of succeeding.

Browse our low-cost franchise opportunities

The good news is, there are plenty of low-cost franchises right here on Point Franchise. Here are a couple of the best opportunities for you to get involved in:

One Delivery

This franchise has the lowest minimum investment cost in the entire Point Franchise directory. It stands at just £495, but remember that you will need to pay £1,995 in franchise fees. This still means that you can get your business going for under £2,500 – fantastic value for money.

One Delivery sends food from independent and chain restaurants to the people who have ordered it. You may find yourself delivering meals from McDonald’s or KFC, for example, to hungry fast-food fans in the local area.

There is currently a total of more than 100 One Delivery franchises set up in 65 cities across the UK, from Brighton to Aberdeen. The huge network attends to over £1 million worth of orders every month, so you could potentially generate a £50,000 turnover within two years.

Principal Tutors

This tutoring franchise requires just £995 to set up. As a franchisee, you can choose to offer one-to-one classes to your pupils or hire a group of qualified tutors to run them for you. You will be able to deliver educational sessions in a range of different subjects at GCSE and A Level standard. This means you give your pupils the chance to succeed in school and make a better future for themselves.

Principal Tutors offers ongoing guidance in marketing and help with growth strategies, so you are equipped to develop your business over the years. The franchisor team will also help you grow a competent team of tutors. In addition to this, the franchise gives you the choice of operating the business on a part or full-time basis, which means you’ll be able to continue with any existing commitments, should you choose to.

Finally, you’ll benefit from low, fixed management fees and no expensive withdrawal penalties. As a result, you won’t need to make as much in revenue in order to stay profitable. This is a fantastic franchise to get involved with; not only is it cost-efficient, but it also involves rewarding work, helping students get to grips with tricky academic subjects and improve their prospects.

More opportunities

There are plenty more where those came from – take a look at other low-cost franchise opportunities.