While low-cost franchises provide many of the same advantages their pricier counterparts do, they offer several additional ones including:
1. Accessibility: Many franchises such as Dairy Queen, Pearle Vision and Orangetheory Fitness, require an initial investment of hundreds of thousands of dollars. According to FRANdata, there are currently 668 low-cost franchise opportunities with minimum investment requirements of under $100,000, covering 29 industries you can consider.
Because it doesn’t cost an arm and a leg to invest in a low-cost franchise, some people supplement their existing business with one.
“For the past 12 years I have owned a successful special events company that deals with destination events. I thought it was a good move to invest in a second business that complemented my core business and offered me an easy product to promote,” says Eddie Diaz with owns a Dream Vacations franchise. “I looked at franchise models because, quite honestly having gone through the process of building my event company, I didn’t want to start from scratch again. I wanted to hit the ground running.” Dream Vacations franchisees are home-based travel professionals.
2. Flexibility: Since it’s likely you won’t have a brick-and-mortar location that requires someone to be on-site, you will have flexibility regarding your work hours.13% more low-cost franchisees than all other franchisees who participated in our research work 40 or fewer hours per week.
Since low-cost franchises typically are home-based businesses and do not require a lot of staff, profitability may be achieved more quickly.
3. Faster Profitability: Since low-cost franchises typically are home-based businesses and do not require a lot of staff, profitability may be achieved more quickly. When asked if their business is meeting their financial expectations, 67% of low-cost franchisees vs. 60% of all other franchisees Franchise Business Review surveyed said yes.
“One of the biggest advantages of investing in a low-cost, home-based travel franchise is that there is no overhead. There is no inventory and you do not have to keep a product in stock to sell because you are selling dream vacations,” says Tim Courtney, VP of Franchise Development for Dream Vacations. “Another benefit is that because the start-up cost is so low, you can more quickly earn back your initial investment.” 95% of Dream Vacations franchisees work from home.
4. 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 territories. Based on our current research, the average pre-tax income for two of the most lucrative low-cost sectors is $103,400 for Real Estate and $95,700 for Business Services.
Investing in a low-cost franchise is a low-risk opportunity that will allow you time for growth.
“Investing in a low-cost franchise is a low-risk opportunity that will allow you time for growth,” says Erin Patrick, Director of Operations for Just Between Friends. “In addition, you have the option and the ability to purchase additional territories without having to take out large loans and go into debt that could take several years to pay off.” Just Between Friends provides pop-up consignment sales events that focus on child and maternity items. 100% of its franchisees work from home.
5. Resilience: Since they typically do not to require much overhead and staff, low-cost franchises may fare better through challenging economic times. This is especially true if they provide non-optional services such as senior and child care or automobile and home maintenance.
The majority of low-cost franchises are service businesses that can be run out of a home office.
6. Remote Work Capabilities: 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, including a beach while on a family vacation, as long as there is Internet access.
The number of low-cost franchises available to select from can be overwhelming. For a list of brands whose franchisees rank them highly, visit our latest Top Low-Cost Franchises report.