Low Cost Franchises Could Mean a Big Opportunity

 

Starting a new business can be intimidating. But purchasing a franchise can be a realistic—and much more affordable—entry point for many entrepreneurs. If you are ready to explore franchising opportunities, Franchise Guardian can help you research and discover just the right franchise for you. And there are many low-cost franchises available that make great first-time investments.

What Can I Expect When Seeking Low Cost Franchise Opportunities?

Purchasing a franchise isn’t for everyone. But for those entrepreneurs seeking a fast startup business, it does present many advantages. The benefits of operating under an established brand with a firm customer base and built-in support give franchising an impressive head start. The parent company—or franchisor—has already accomplished the hard work of creating the business concept, building the brand, and developing a marketing strategy. Franchisees are able to build on that solid foundation by operating their own business with creativity, but under the supportive umbrella of a strong parent company.

When purchasing a franchise, there are four main costs to consider:

  1. Franchise Fee – Practically every franchise opportunity requires payment of a one-time, upfront fee to enter a franchise agreement. These can range from as little as $100 to as much as $1,000,000 or even more.
  2. Initial Investment – Your initial investment typically covers the resources you’ll need to launch, which can include computers, machinery, stock, land, a building, and more. Low cost franchises will demand less than larger, more popular franchises.
  3. Ongoing Investment – This is the money you’ll need to run your franchise after entering the franchise agreement, procuring everything needed, and opening for business.
  4. Personal Finances – Some franchises require new franchisees to have a minimum net worth to be eligible to purchase a franchise. Most low cost franchises do not.

These four initial investments or requirements are the biggest barriers to entry for most entrepreneurs seeking to purchase a franchise. For example, a large franchise like McDonald’s can cost more than $1 million to open. But more affordable franchises do exist, and they span a wide range of industries—digital, travel, cleaning, fitness, and more. Some low cost franchises can even be operated as home-based businesses, making them even more affordable.

Another aspect of low cost franchises is that they tend to be less known than their larger counterparts. This means less brand recognition and a smaller customer base, which also translates to lower profits. Before entering into any franchise, seek the advice of a franchise advisor from Franchise Guardian. We can help you research, review paperwork, and evaluate all manner of franchise opportunities to see which ones are right for you.

What Financing Options are Available to Help Me Purchase Low Cost Franchises?

Even with low cost franchises, you may need some financial help to get started. Options exist to help entrepreneurs obtain the resources necessary for purchasing a franchise. Most lenders look favorably on franchising because of its predictable nature. Any business with a history of success has a better certainty of return and lower risk than a brand-new company.

Friends and Family Loan

If you have the option to borrow capital from family and friends, that should certainly be your first choice. Very often, favorable arrangements can be made that include low interest and a longer repayment schedule. Just remember there are can be drawbacks to involving those closest to you in your business finances.

Financing Through the Parent Company

Some parent companies offer financing options for new franchisees, even lost cost franchises. Even if they do not offer direct financing, they may have special relationships with lenders that can help you procure the needed resources. However, always compare what the parent company has to offer with outside lenders to determine which option is the better deal.

Traditional Loans

A traditional business loan, or term loan, is the option most people think of when discussing the necessary capital for obtaining a franchise business. Even some low cost franchises may require a loan of some amount, so researching the available loan options is wise. Also remember that some term loans restrict how the money is to be used, so be sure to inform the lender up front that you are seeking to purchase a franchise.

SBA Loan

The Small Business Administration provides loan programs with long repayment terms and low interest rates, so they should be at or near the top of your options to investigate for possible financing. The SBA 7(a) loan is very applicable in particular for low cost franchises. The application process is typical of any government program, long and tedious, so be prepared.

Low Cost Franchises with Franchise Guardian

Are you ready to explore the possibilities of low cost franchises? Franchise Guardian can help you through every step of the research, discovery, negotiation, financing, and purchasing process. With 30 different industries from which to choose, we can help you choose a low cost franchising opportunity that is the perfect match for your interests and goals. Call or contact us online today for more information.

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