Low-Cost Franchises Offer Many Unique Advantages

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While quality low-cost franchise offer the same benefits all solid franchise brands do including good training, strong leadership, a supportive franchisee community, and proven successful systems, they provide some unique ones too. 

Affordability: Many franchises require an initial investment of hundreds of thousands or even millions of dollars. Low-cost franchises enable you to own your own business without a huge investment. The initial investment of the low-cost franchises with the highest franchisee satisfaction that made our 2016 Top Low-Cost Franchises reportranges from $2,095 to $99,975.

Expedited Profitability and Less Debt: Lower start-up costs combined with less overhead increases your chances of achieving profitability faster. Higher cost franchise opportunities, which are usually more expensive to run and may require larger loans, typically take much longer to generate a return on your investment.

“The low overhead that comes with owning a home-based franchise is a huge advantage,” says Thomas Bunchman, CEO of JumpBunch, which offers sports and fitness activity programs for children. “The funds that would have to be used to pay for rent, electricity, water, and maintenance somewhere else instead go towards direct revenue generation.”

Easier Scalability: If you aren’t buried in debt and are making a good profit, you may well have the funds needed to purchase additional locations or territory. Based on our current research, the median annual pre-tax income of multi-unit franchisees is $88,000, with 29% earning over $150K and 16% earning over $250K. By contrast, only 11% of single-unit franchise owners earn more than $150K and only 4% earn over $250K.

Recession Resistant: Since they typically do not to require expensive overhead and lots of staff, low-cost franchises tend to have a better chance of surviving through challenging economic climates. This is particularly true of those that fulfill non-optional needs such as senior and childcare services, as well as automobile and home maintenance.

More Location Choices: The majority of low-cost franchises are service businesses that can be run out of a home office. Some franchisees can run their business from anywhere with Internet access.

Flexible Hours: Since it’s likely you won’t have a brick-and-mortar location that requires someone to be on-site, you can answer client calls while watching your children play sports and schedule client appointments around other things that are going on in your life. Even though your hours may be flexible, you are going to have to work very hard to make your business a success.

“I put in about 45 hours of office time during the week, go home and coach sports with my kids, then spend a few more hours at night on business activities,” says Pete Wilson, owner of a Window Genie franchise in West Chester, OH. “The first few months of business were much more hectic. I now have a good rhythm to the week.”

To learn about what its like to own a low-cost franchise from franchisees who currently do, see our 2016 Top Low-Cost Franchises report. For more information about many of the brands featured in the report, visit FBR50.com.

As the Editorial Director at Franchise Business Review, Emma Pearson reports regularly on today's top franchise opportunities and the latest trends in franchising. She also writes and oversees the publishing of Franchise Business Review's annual Top Franchises, Top Low-Cost Franchises, Top Franchises for Veterans and many other specialized franchise reports. They feature the only lists of top franchises based on feedback from those who know best - the franchisees who own them.

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