Low-Cost Franchise Opportunities for a Financially Secure Future
Owning a low-cost franchise opportunity can offer great financial rewards including business assistance, brand recognition, higher profit margins, and lower failure rate. Unfortunately, it still comes with a set of risks.
For example, you can’t always predict the market and you can end up with lower profit margins than you expected. This can lead to you having to cover the costs of your employee’s payroll straight from your pocket. Another thing you need to consider is that you will have to pay royalties as long as you are a part of the franchise. There is also a potential risk that you can experience conflict with the franchisor.
Without knowing where to get started, it can be difficult to take the first step in franchise ownership and stewardship. This article defines the concept of a franchise, the basic criteria for evaluating an opportunity, and the best franchises to buy and own.
What is a Franchise?
A franchise is a business model where you are able to buy into an existing business that is already established and has made a name for itself in the market.
To acquire a franchise, you as the franchisee will have to pay a substantial amount of money in the beginning followed by monthly royalty payments towards the franchisor. This included the franchise fee which can cost anywhere from $20,000 to $50,000, according to the Small Business Administration.
A few popular franchise types include:
- Job franchises: This is a low-cost franchise that you can manage from your home without having to employ more than five people. Examples include cleaning services, plumbing, pool maintenance, or travel agencies.
- Product franchises: Investing in these franchises allows you to distribute the company’s products or services. Examples include cars, car repairs, appliances or vending machines.
- Business format franchises: The franchisee who invests in this type of franchise will receive the entire business format including trademarks, marketing strategy, and a system on how to run the business. Examples include fast food, restaurants, fitness and retail companies.
- Investment franchises: This franchise type requires a large amount of capital upfront. Generally, the person who invests in this business is not physically involved in the day-to-day running of the business and rather has a management team do the work for him/her. Examples include hotels or large restaurants.
- Conversion franchises: This is when an investor goes to an existing business and converts them into a franchise, or it can mean that a business wants to convert themselves and other locations into a franchise. Examples include real-estate brokers, florists, pizza delivery, or a nail salon.
How to Evaluate Franchise Opportunities
There’s a lot to consider before buying into a franchise opportunity. A viable first step before investing a significant amount of money is speaking to previous and current franchisees about their experiences.
Getting a first-hand account on the day-in and day-out operations of a franchise, along with insights into how long it took them to get the business up and running, challenges that they faced, and what support the franchisor offered during all stages of the business, can help you in your decision making process.
To that end, when evaluating your franchise opportunity, you might want to consider the following questions.
- What are the Franchise Fees and Set-Up costs? When buying a franchise, you will have to allocate a large quantity of money to invest in the business. This includes start-up costs, working capital, royalty fees, advertising costs, franchise fees, and unexpected costs — do you have the funds on-hand, or access to credit, in order to afford these initial costs?
- How Profitable is The Franchise? The main element that makes a franchise attractive is its profitability. Keep a close eye because the market isn’t always predictable, and you might not get the return on investment that you expected. To avoid this from happening you can create a strong business plan, have capital in reserve, learn as much as you can, follow the system provided by the franchisor and most importantly make sure to choose a franchise that interests you.
- Do you have the Time Commitment? Even though owning a franchise is slightly different than owning a traditional business, it is still an enterprise that necessitates many hours of hard work. Are you able to handle the time commitment all by yourself or will you have to hire an extra set of helping hands? Can you afford to hire an extra set of hands?
- Are there available territories in your area? For a franchise to succeed it needs to be in a suitable area where people actually want the service you’re providing. If the market is oversaturated and you are too close to another competitor then you are essentially splitting customers and that will lead to lower profit margins.
- You can evaluate the market by doing research on how many franchises already exist in your area and how much money they are (likely) bringing in. Some businesses will share these figures. A simpler approach is to actually visit these franchises and see how busy they are.
- What’s my franchise’s brand recognition? : Is the low-cost franchise opportunity you are looking to buy popular? If not you want to make sure there is a growth opportunity and that the franchise has laid out marketing strategies that can help your business expand.
10 Great Franchises to Buy and Own in 2021
We have done the following evaluation to help give you an overview of low-cost franchise opportunities. This evaluation includes the initial investment, franchise fees, the number of units available in the US, and the yearly growth rate.
We have compiled a list from the SBA Franchise Directory of 10 low-cost franchise opportunities that you can invest in. The SBA also provides information that can help you plan, launch, manage and grow your business. This includes market research, competitive analysis, hiring and managing employees, and how to recover from disasters.
1. United Country Real Estate
United Country Real Estate assists people who are looking to buy rural homes, luxury country estates, farms, ranches, land and many other property types. They also boast of having the largest network of conventional and auction real estate professionals.
As a franchise owner, you will assist people in the buying and selling of properties. United Country is looking for people who have experience and are specialized in certain areas. If you are looking to sell farms, they want you to have extensive knowledge on farming.
- Initial Investment Range: $10,875 - $50,380
- Franchise Fees: $8,000 - $20,00
- Total Franchise Units: 593+
- Yearly growth Rate: 3.6 percent
2. Cruise Planners
Cruise Planners specialize in booking cruises to destinations around the world. Cruise planner's headquarters are in Coral Springs, Florida.
As a Cruise Planner franchise owner, you will help clients book vacations, cruises, and tours. You will also assist them in finding discounted flights, hotels, and day-to-day tours.
- Initial Investment Range: $2,095 - $22,867
- Franchise Fees: $6,995
- Total Franchise Units: 2500+
- Yearly growth Rate: 19 Percent
3. Dream Vacation
Dream Vacation is a travel agency who happens to be the world’s largest seller of cruise vacations.
Your day-to-day work will include helping people book their dream vacations by finding affordable pricing on hotels, flights, car rentals and tours. This will also include helping people in creating a travel itinerary.
- Initial Investment Range: $3,245 - $21,850
- Franchise Fees: $495 - $9,800
- Total Franchise Units: 1300+
- Yearly growth Rate: 38.8 percent
4. Help-U-Sell Real Estate
Help-U- Sell is a low set-fee and full service real estate agency that helps both the buyer and seller through the purchasing process.
As a Help-U-Sell Real Estate franchisee you will assist people through the process of purchasing and selling a home.
- Initial Investment Range: $29,650 - $67,650
- Franchise Fees: $17,750
- Total Franchise Units: 103+
- Yearly growth Rate: 11 percent
Lisa Druxman founded Fit-4-moms in 2001 as a way to stay active while searching for a community for first-time moms.
As a fit-4-mom franchise owner, you will offer fitness classes at all fitness levels for moms in every stage of motherhood, ranging from pregnancy to postpartum.
- Initial Investment Range: $6,205 - $24,285
- Franchise Fees: $5,495 - $10,495
- Total Franchise Units: 1300+
Jazzercise was founded in 1969 by Judy Sheppard Missett. As a Jazzercise franchise owner you will manage a fitness studio that combines dance, strength and resistance training with popular music for a full-body workout.
- Initial Investment Range: $2,500 - $3,800
- Franchise Fees: $1,250
- Total Franchise Units: 8300+
- Yearly growth Rate: 6.8 percent
7. SuperGlass WindShield
SuperGlass WindShield is one of the biggest repair specialists in the world and was established in 1992.
Owners of this business can expect to offer services including windshield repair, headlight restoration and scratch removal.
- Initial Investment Range: $9,910 - $31,000
- Franchise Fees: $9,500 - $28,500
- Total Franchise Units: 336+
- Yearly growth Rate: 1.2 percent
8. Complete Weddings + Events
Complete Weddings + Events is an event planning company that offers custom packages with good prices to help plan anything from weddings to parties.
Your day-to-day work will include helping brides create their dream weddings or help companies plan a successful corporate function.
- Initial Investment Range: $10,000 - $12,000
- Franchise Fees: $18,000 - $42,000
- Total Franchise Units: 187+
- Yearly growth Rate: 4.6%
Jan-Pro is a franchise cleaning business that cleans and disinfects your commercial properties. They have held #1 position in commercial cleaning for 12 years straight by Entrepreneurs “Franchise 500 ranking” As a franchisee of Jan-Pro, you can focus on cleaning and disinfecting properties such as fitness centers, restaurants, government offices, schools, and medical facilities. You don't have to worry about doing any selling as Jan-Pro finds all the customers for you.
- Initial Investment Range: $3,985 - $51,605
- Franchise Fees: $2,520 - $44,00
- Total Franchise Units: 375+
- Yearly growth Rate: 4.8 percent
10. Rhea Lana’s
Rhea Lana’s are the national leading children’s consignment event. Rhea Lana’s company has been a top franchise for 10 years straight by the franchise business reviews hall of fame.
As a Rhea Lana’s franchise owner, you can expect to arrange and manage events in your community to help bring moms together by giving them the opportunity to sell their baby’s old clothes, toys, furniture, or baby equipment at a 60 to 90 percent off the original retail price.
- Initial Investment Range: $20,550 - $39,950
- Franchise Fees: $11,900 - $14,900
- Total Franchise Units: 100+
- Yearly growth Rate: 23.5 percent
How to Get Started With a Franchise Business
There are many different aspects that you should look at when buying into a franchise company. Yes, it can be a solid investment if you succeed. Unfortunately, according to the Bureau of Labor Statistics, 20 percent of small businesses fail within the first year, which is why it's essential to ask the right questions before investing in a franchise.
Some of the questions you should ask yourself before acquiring a franchise include:
- Do I have the required money to invest in a franchise? That will include the initial franchise investment and the initial franchise fees. Always set aside provisions for unexpected costs like equipment failure, loss of staff, or profit margins that are declining. This can be a fixed amount every month or 20 percent of your profits after deductions.
- Do you have the necessary business experience to run a franchise? At the end of the day, it is up to you as a franchisee to make a success of the business, without the experience you might find it a lot harder to keep the business afloat. There are ways to work around this by doing business-related courses, hiring a business coach or doing your fair share of research, such as analyzing your competitors, writing a business plan, or calculating your startup costs.
- Do you have the time to run a franchise? If you want to continue working a 9 to 5 job while owning and operating a business, then you might not have the time necessary to get your franchise up and running. It might behoove you to employ a manager, which inevitably will lead to extra labor costs that you should consider in your business plan
- How easy is it to establish a relationship with the franchisor? Most of the time you will be working directly with the franchisor, as they are your go to person in the early days of your business. You’ll be chatting with your franchisor as it relates to the implementation of new ideas at your franchise location — as such, if you don’t get along it can cause strain on the business. If the franchisor isn’t giving you the support you need or offering the training that was promised.
The Bottom Line
Owning a low-cost franchise opportunity can be a solid investment that gives you the freedom a traditional 9-5 doesn’t provide — provided you play your cards right.
You can own a business model that 100 or more units have already proved. The franchises also give you ways to market and grow the business, meaning you don’t have to figure out everything on your own — alleviating much of the stress that comes with running a more traditional business. Plus with the right insights you can plan ahead to better ensure the likelihood of profit (though no business is guaranteed to end up in the black).
Consider all the factors relevant to the start and operation of a franchise business — and what it will require of you as a franchise owner — before purchasing your own franchise. With the right planning, you could be well on your way to owning more than one business very soon.