Seven Ways to Start a Franchise With a Limited Budget
Lily Sweeney, writer
Published at 10/05/2018, Updated on 23/10/2024 , Reading time: 6 min
Running a franchise is a dream for many people, but figuring out how to start a franchise on a limited budget takes time, effort and compromise. In this article, you’ll find guidance on how you can become the owner of a low-cost business, including a number of ways to get started, and a list of franchises with low startup costs.
Though the limits of your budget might seem very constraining, there are plenty of franchising opportunities available which won’t break the bank. If you want to become a franchisee, you can - you just have to find the right franchise for you.
Running your own business is an adventure, and investing in a franchise with a proven track record of success is likely only to boost your financial situation in the long term, allowing for expansion later down the line.
The costs of franchising
When you’re figuring out how to start a new business on a shoe-string budget, you need to be fully aware of the different costs involved in the franchising process. The full costs for a franchisee will vary widely depending on the type of business you’re looking to get involved in (see our list of low-cost franchise types below). Generally speaking, becoming a franchisee comes with two main costs:
Initial franchise fees. These fees give you the right to use the brand name, and entitle you to the various franchisee offerings of the franchise of your choice.
Ongoing royalty/service fees. These fees are paid on an ongoing basis, are generally a certain percentage of your sales, and cover the ongoing support you receive from your franchisor. These fees can range from 0-20% of sales, but usually fall at around 8% [smallbusiness.co.uk].
Point Franchise has written many other informative articles on the topic of franchising costs, including a comprehensive guide to franchising costs for franchisees, and a franchisor-focused deep dive into the cost of franchising your own business.
Seven ways to get started with a limited budget
1. Look into available financing options
Trying to finance a franchise without a lot of money in your pocket is tough, but funding options are available. Funding support could come from the franchise itself, with some franchisors willing to cover many of the set-up costs for franchisees. Funding could also come in the form of a business loan from a bank with a specialist franchising department.
2. Search for opportunities in industries where you can lend expertise, if not capital
An informed franchisee is a successful franchisee, and even if your finances aren’t in amazing shape, you might still have exactly what a franchise needs to succeed. Be sure to begin your search for the right investment opportunity in industries that you have experience in, and knowledge of. Someone might need you more than you think.
3. Search for low-cost investment opportunities
Franchises offering initial fees of under £10,000 are generally considered low-cost franchising opportunities [Franchise Supermarket].
4. Consider investing in a low-cost part-time franchise
What is a part-time franchise?
A part-time franchise is a franchise which, as you might have guessed, can be run on a part-time basis. Thousands of part-time franchising opportunities are available across the UK, and franchisees can choose to run their own business and also retain a wage-earning role elsewhere. Many franchises offer full-time and part-time options, such as business franchise eDivert.
>> Read more:
- Attention First-Time Franchisees: Start a Franchise for Under £10K
- Are low-cost franchises all they seem?
- Top 10 Low-Cost Franchises to Consider in 2020
- Is a low-cost franchise right for you?
Why does it cost less to invest in a part-time franchise?
For part-time investors, the costs are shared, and therefore, significantly reduced.
What are the benefits of running a part-time franchise?
Running a part-time franchise offers franchisees the flexibility and convenience to build their work around their life, rather than the other way around. Running a part-time business alongside your full-time job can be challenging, but it can also be financially and emotionally rewarding.
5. Consider investing in a low-cost van-based franchise/mobile franchise
What is a mobile/van-based franchise?
A van-based business operates out of a van, meaning you can do business on the go. A mobile business brings services into the homes of clients, coming to them rather than the other way around. Examples of low-cost businesses working on the move are construction franchise Approved Resin Driveways and fryer management franchise FiltaFry.
Why does it cost less to invest in a mobile/van-based franchise?
As mobile franchises don’t need premises to operate out of, startup costs are lower than they would be for most other types of business.
What are the benefits of running a mobile/van-based franchise?
Franchisees on the move aren’t tied to a desk, and can instead be active in the community, meeting customers where they are. Owning a fleet of vans and operating out of them is also an in-built marketing tool, as employees will spread the word everywhere they go.
>> Read more:
- 4 Reasons Why Investing in a Franchise Is Worth It
- Thinking About Investing in a Franchise? Here's What You Should Keep Top of Mind
- How to Avoid Going Broke by Investing in a Franchise
- To Invest in a Franchise or Start Your Own Business, That Is The Question.
- 10 Pros and Cons of Investing in an Established Franchise
- Ready to Invest in Your Future? 5 Reasons Why Investing in a Franchise Makes Solid Business Sense
6. Consider investing in a home-based or digital franchise
What is a home-based/digital franchise?
A home-based, or “digital”, franchise, much like a mobile franchise, doesn’t require an external office space. Instead, franchisees work from home to provide services to customers. Examples of thriving franchises with home-based working options include finance franchise Brokerplan and tutoring franchise Choice Home Tutoring.
Why does it cost less to invest in a home-based/digital franchise?
Digital franchise investors don’t need to source and pay for an office space. Working from home will save a huge amount on both initial investment costs and continuing costs like rent.
What are the benefits of running a home-based/digital franchise?
Working from home saves time and money - you skip the commute, you skip office space rents, and you’re able to work flexible hours that fit around your life. Home-based franchisees will also have access to certain tax advantages, and will be able to offset expenses like Wi-Fi and office supplies.
7. Ensure you’re making a sound financial decision by doing your research
It’s always advisable to carefully research any significant investment, but it’s even more important if you’re doing so on a tighter budget. If you’re on the verge of making an investment in a particular franchise, make sure you’ve completed thorough research not just on the sector, but on the franchise itself.
Start your franchising adventure today
Whatever your financial situation, you can begin your journey as a franchisee today. Figuring out how to invest in a franchise with a limited budget isn’t easy, but if you’re driven, determined, and willing to learn, you can forge a career in franchising. To find the right franchise for you, browse Point Franchise’s full UK directory, and look out for news stories sharing new franchising opportunities.
Lily Sweeney, writer