Many people equate franchising with the fast food business – burger flipping, tons of employees and high start-up costs. But the truth is that idea of the franchise model is changing fast.
In fact, new low-cost opportunities for franchisees arise each day in just about every category. The cheapest franchises, though, have small start-up costs and below average liquidity requirements. Honestly, it’s never been more cost-effective to start a franchise than now – which is great news for entrepreneurs.
The cheapest franchises to start have a few things in common: They’re usually home-based or mobile operations that are run by a single operator. Single-person operations cut payroll costs, and as home-based franchises they don’t require expensive lease payments and high build-out expenses. Additionally, the majority of home-based franchises keep equipment and materials costs to a minimum – no need for expensive fryers or brand-new IT systems.
So how much does it cost to own a franchise? It depends on a few factors. But the cheapest franchises can cost less than $10,000, with the majority of low-cost options in the $10,000 to $80,000 range to start.
As the cheapest franchises keep costs to a minimum, restaurants aren’t traditionally on the list — although there are a few lower-cost food franchises like Dickey’s Barbecue and Doc Popcorn. Instead, the cheapest franchises usually offer professional services and/or product sales – i.e. non-medical care, janitorial services or tax preparation expertise. Here’s a closer look at some of the cheapest franchises to start:
Non-Medical Senior Care Franchises
As the Baby Boomer Generation continues to age, the need for non-medical care providers is growing. True, non-medical care is a crowded field with many franchisors offering business opportunities, but these are generally low-cost businesses to start ranging between $50,000 and $100,000.
Comforecare Senior Keepers
Carebuilders at Home
Always Best Care Senior Services
Professional Services Franchises
These days, there’s a service franchise in just about every category. Some, like tax preparation, require a bit more specialized knowledge, but the truth is professional services franchises can be started by anyone. Often times training is provided upfront for franchisees – otherwise the franchise must develop an expertise on their own.
Many of these franchises are mobile or home-based businesses and require the franchisee to work directly with customers or other businesses. For example, bookkeeping franchises are a common professional service franchise that can be home-based operations.
The start-up costs for a professional service franchise really depend on the service being offered. For instance, travel agent franchises have lower start-up costs, often starting lower than $10,000, whereas investment advisor franchises and tax preparation businesses that require more specialized knowledge tend to cost $50,000 and up to start.
Liberty Tax Service
Janitorial and Home Cleaning Franchises
Cleaning franchises will always be in-demand, which makes this one of the most reliable franchises to own. One reason they’re a cheap franchise is that they’re often home-based – which saves each month – and they can be run by a single operator. Many janitorial/cleaning franchises require between $20,000 and $60,000 to get started, with some extra start-up costs for equipment and supplies.
Chem-Dry Carpet Cleaning
Vending Machine and Kiosk Franchises
Vending machine and kiosk businesses are some of the cheapest franchises to own, and they leave a bunch of potential for growth. For instance, you can start by managing one or two kiosk locations to get the franchise off the ground before acquiring new machines. There are plenty of vending machine/kiosk franchises that cost less than $10,000 to start.
Naturals 2 Go Vending
Visit Franchise Gator if you are interested in searching more opportunities for the cheapest franchise for you.
When it comes to starting your own business these days, we tend to hear a great deal about tips for operating a personal website to make money. And certainly, if you have a marketable skill or provide a unique product or service, there are plenty of ways to establish your own freelance business online, using a variety of tools for business efficiency and sales alike. For some, it means making use of Google’s ad placement programs to generate more traffic and ultimately profit from an online website; for others, it means investing in Sharefile to help create a professional online atmosphere for a growing business, complete with cloud computing and file sharing security; and for others, it simply means relentless exposure through social marketing.
All this is to say there are plenty of ways to grow an online business – but when you hear about personal entrepreneurship and business endeavors, it’s also important not to jump immediately to thinking about Internet opportunities. Sure, every now and then someone strikes gold with a popular blog, or establishes a brand new company almost entirely online – but real world opportunities, and specifically franchising, can still offer you a great shot at establishing your own business.
Naturally, we’re all about helping our readers to learn more about the franchising process, and about the approach to purchasing franchises. But every now and then it’s nice to see some specific businesses listed, in addition to learning your own approach and figuring out what to look for in a franchising opportunity. So for that reason, here’s a quick look at the top 10 franchises to own (along with the cost to start up) in 2013, as ranked by www.entrepreneur.com.
Hampton Hotels – $3.7 million to $13.52 million average startup cost.
Subway – $85,690 to $262,850 average startup cost.
Jiffy Lube International, Inc. – $196,500 to $376,000 average startup cost.
Denny’s Inc. – $1.17 million to $2.4 million average startup cost.
McDonald’s – $1.02 million to $2.18 million average startup cost
Pizza Hut Inc. – $297,000 to $2.1 million average startup cost.
Naturally, rankings as you view them will depend on a number of personal factors as well, from your budget, to personal interest, to what specifics you’re looking for in a franchising opportunity. But the above listed rankings are made with most of the major general factors in mind: growth potential, financial stability, long-term consistency, etc. Of course, there are plenty of wonderful franchising opportunities not mentioned on this list – but if you’re looking for a few companies to look at just to start your search, these are worth checking out!
This is another one of my personal favorites… This was written in early 2009… Enjoy!
“Benchmarks” not “Goals” – Enhancing Your Personal and Professional Growth
A Word Defined
Not long ago I did a search looking for the definition of the word “growth”. My curiosity was prompted by a discussion with some of my colleagues at a networking event. Growth is defined in a number of different ways. In my opinion www.wikipedia.org describes it best:
“Growth refers to an increase in some quantity over time. The quantity can be physical or abstract. It can also refer to the mode of growth, i.e. numeric models for describing how much a particular quantity grows over time.”
Growth is perhaps the most important aspect personal and professional development. If you don’t focus on it, you can quickly become expendable to your employer. On the personal side, without growth your relationships may suffer. The same can be said for companies who don’t have an appropriate strategy for growth. Businesses lacking vision to improve their service or product and grow their customer base will likely be gobbled up by competitors. This begs the following questions:
How do we continue to grow?
What strategies can be implemented to enhance our growth?
The Typical Solution – Set a Goal
A common solution is to establish goals. The most successful people I know set goals or targets for achievement. If you are a teacher you may establish a specific GPA for your class to achieve. If you are in sales or management you can set production or efficiency goals for your employees. Almost every business establishes goals for their fiscal year. This is usually discussed during quarterly meetings with senior management or, if the company is publicly traded, with Wall Street securities analysts. According to www.wikipedia.org:
“A goal or objective consists of a projected state of affairs which a person or a system plans or intends to bring about – a personal or organizational desired end point in some sort of assumed development. Many people endeavor to reach goals within a finite time by setting deadlines.”
There are a few key words worth noting in this definition – finite, deadline and end. These words highlight the fundamental problem with goal setting and why it’s the wrong strategy to promote growth. The irony is this strategy will sometimes achieve the opposite result. Let me explain.
A few years ago my wife and I were on vacation in the Caribbean. We got up early one morning to participate in a 3 mile run sponsored by the hotel. We were led by and older gentleman who was an experienced runner and regular participant in both the New York City and Boston Marathons. During our run he explained the best time to pass a competitor is at the peak of a hill. The reason is simple. Most runners see a hill as a challenge and set a goal to reach the peak. Unfortunately, what typically happens is their subconscious mind tells them to relax at the summit. They get complacent at the peak and start to slow down because the goal was achieved. This is when you make your move. Your opponent relaxes, lets their guard down and is susceptible to being passed. Surprisingly you don’t need to go all out to move ahead. You simply need to concentrate, maintain your pace, and you will blow right by them. This is where the problem lies with goal setting. Once your objective is achieved you get complacent and growth stops. To prevent this from happening a suggested tactic is to establish a benchmark.
Measured Performance with Benchmarks
Businesses like people are living entities. They need day-to-day attention in order to be successful. A successful business owner needs to constantly work on their business model, refine their process, educate employees and lastly – be willing to change. You also need to measure your results. This helps evaluate your progress and provides a framework to measure growth. According to www.websters-merriam.com, a benchmark is:
2 a: a point of reference from which measurements may be made b: something that serves as a standard by which others may be measured or judged c: a standardized problem or test that serves as a basis for evaluation or comparison
By using a benchmark, you have a clear measurable way to evaluate your progress without becoming complacent. These benchmarks should be established on small scale to avoid overwhelming you and or your employees.
A good example in how benchmarks can be helpful is with weight loss. Health professionals generally agree the healthiest way to drop weight is to slowly burn it off over a period of to several months. Most people, however, approach the problem by setting a goal weight within a set time period. This creates two problems,
Unrealistic expectations which leads to disappointing results, or
Setting the bar at a level that is easily achieved
Everyone has a different metabolism and thus burn calories at different rates. If you set an unrealistic goal weight or timeframe you will likely become disappointed and quit. Ironically this can happen even though you are getting results. The problem is the results are not what you envisioned. Another problem is establishing a goal that is too easily achieved. This creates a similar problem to the running up a hill we discussed previously – complacency. Once we reach our goal weight we lose focus and put the weight back on, a common problem among compulsive dieters.
Instead of establishing a goal weight, a more effective strategy can be implemented with benchmarks. A good starting point could be to lose 1 pound a week. With this strategy you can slowly modify your diet, add a little exercise and measure your progress without being overwhelmed and losing focus. If you are achieving your benchmarks too easily you can increase them. If you are not achieving desired results you can modify your diet and exercise routine accordingly. This strategy will likely achieve better results and reduce the likelihood of complacency or becoming overwhelmed.
Time to Get Started
We can all agree growth is key to our success. Establishing an effective growth strategy can mean the difference between staying in business, or going under. Most tend to use goal setting as a method to achieve results. Unfortunately this technique can backfire leading to disappointing results or complacency. A simple strategy using benchmarks can help avoid these common pitfalls. Setting reasonable benchmarks can be a useful tool to keep your business moving forward, and most importantly help achieve the “growth” you desire.
This was one of my first blog posts written in early 2010 It’s now added to my greatest hits… LOL… Enjoy!
A good friend of mine is one of the best golfers I know. He is a steady single digit handicap where a round of par is a reasonable and expected goal. He is also very successful entrepreneur. His success provides him ample time to focus honing his skills for the game he loves. You can learn a lot about someone by playing a round of golf with them. The game is both a physical and mental test challenging your focus, honesty, sportsmanship and temper. That’s probably why my friend always plays a round with someone before he elects to do business with that person. If only we all could be so lucky.
Another great thing about golf is you can apply it to just about anything you do in life. Do I take a chance here and go for the green? Or play it safe and lay up? All of us face decisions like this in our everyday lives. Some may take a risk adverse approach. Why take a chance? Especially if you’re playing well. I know a lot of golfers who avoid the use of certain clubs due to fear and lack of confidence. Then there are others who approach a certain shot, assess the conditions and go for the green. As you approach your everyday life, I suggest you ask yourself what course of action would you take?
This is where my friend gave me some good advice about how he approaches the game. He plays every shot like it’s the last one he’ll ever take. This does not mean he plays carelessly or takes unnecessary risks. He simply uses all of his clubs, assesses the probability of success and hits the ball. Sounds simple enough, but I ask you how often do we find ourselves in a similar situation in everyday life? Yes, the payoff would be nice but it seems too risky, better off to lay up and not make a mistake.
The reality is those willing to take the chance are more likely to be happier, healthier and more successful. Yes there will be times where it doesn’t pay off but the key is you gave it a shot. The worst that can happen is you dust yourself off, learn from the experience and move on. As Teddy Roosevelt once said….
“Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory nor defeat.”
I took my friends advice regarding his approach to golf. Playing every shot like it would be my last. Some birdie puts became bogeys and unfortunately some approach shots hit sand or water. Overall though I became much more relaxed and really began to enjoy playing the game……I also finally broke 90.
validated with both current and former franchisees, the next and final step in the process is to visit the headquarters of the franchise. This step called Discovery Day and it’s typically the final step in the process before you sign your franchise agreement and pay the franchise fee to get started.
The structure of a discovery day will vary depending on the franchise system. In fact, some franchises will schedule your visit much earlier in the process. Most concepts, however, will have a discovery day at the very end, after you have completed most of your due diligence, as this can make for a more productive visit.
The best way to think about your discovery day is an opportunity to learn more about the system and feel comfortable that it’s right for you. Some franchises schedule them on a regular basis that can include up to 20 other candidates interested in becoming a franchisee. Others prefer a one on one meeting that is less formal and more intimate. In either case, during your discovery day you can expect to:
Tour franchise headquarters – This is a chance to see the company in action and understand the corporate structure.
Visit with management and key personnel – Meet the leadership of the franchise and have a better understanding for their long-term vision of the company.
Meet with current franchisees and visit a location – If you haven’t had a chance to tour a location in operation, your discovery day is a good chance to see first hand what it’s like to operate the business.
Learn more about the system, products & services – Get a better understanding of the business model, and how products and services are delivered to your location and then to a customer.
Your meetings with management and support personnel are perhaps the most important part of your discovery day. These are the people that will help train and support your business. In addition, you will also have a chance to speak directly with senior management to get a feel for their skills and vision for future growth.
The franchisor will also be looking to determine if you’re a good candidate for the system. In addition, it’s also a way for them to determine how serious a candidate is about buying into their franchise. While some visits can be informal, it’s not uncommon for you to have to go through and interview so the franchise is comfortable that you have what it takes to successfully operate the business.
Discovery day is an opportunity for both you and the franchise to learn about each other and if the franchise system is right for you. While each concept will have a slightly different approach, the concept is the same. All parties want to determine if they can work together and form a long term profitable partnership.
Everyday we face adversity. I like to embrace a challenge as it always provides and opportunity to learn something. One of the biggest issues we face when a problem arises is we tend to make them bigger than they actually are. We look for reasons as to why it’s happening and sometimes blame ourselves. How often do you say to yourself, I have a problem? Probably every day, and frankly if you are not having problems, you are not pushing yourself enough. I wanted to share some thoughts that can hopefully help you overcome problems, as they can in fact be an opportunity.
The best approach when facing adversity is to create a positive perspective. There are no such thing as “problems”; I like to call them “challenges”. While I can hear you laughing, take a moment to think about that distinction. My belief is that subtle re-phrasing is important and powerful. I never use the word “problem”; it doesn’t exist in my vocabulary. The word “problem” has a negative connotation. When you say, “you have a problem”, your approach is coming from a negative perspective. By changing your wording from “problem” to “challenge”, you’re transforming your circumstances from a negative to a positive. It’s now an opportunity.
I enjoy facing a challenge head on and feel great overcoming it. Think about some of your best accomplishments. How did you feel when you were successful? Chances are you felt like you could conquer the world. Herein lies the opportunity with a good challenge. It’s a chance to learn, work through it and feel that sense of accomplishment. Think about this perspective; approach a problem as a challenge. Make it an opportunity. Soon you might actually look forward to a good challenge, as it’s an opportunity to bring out the best in you.
There are a number of different ways to invest in a franchise. Whether you simply want to focus on a single unit, or perhaps develop multiple territories, there are a number of options available. If you’ve been researching the industry, some times the different types of ownership options can be very confusing as sometimes people use different definitions for different types of ownership types.
Area development is where a franchisee agrees to own and operate multiple units in the same geographic location. In this type of agreement, the franchisor sells a defined region where the franchisee agrees to open a pre-determined number of locations over a defined time period. This is where Area Development is different than Regional Development or Master Franchising.
A defined territory and set number of units to be developed…
When you’re an Area Developer (AD) for a franchise, you are required to develop a set number of units over a certain time period. The size of the territory and the number of units will vary depending on the market. You will typically start by opening one location, with additional units opening every twelve to eighteen months. In a Regional Development arrangement, owner of the territory can determine the number of units to open within the market. They have a lot more control in the process versus an AD.
Experience is required…
Area Development requires a bit more experience and investment capital versus operating a single unit franchise location. In this arrangement, you’re typically looking at opening a minimum of five plus locations. Area developers can be the sole operators of their locations, or, if they choose, can actually be responsible for selling additional territories if that’s how they prefer to grow their business. This is all a function of your business goals, as well as the agreement with the franchise.
The Advantages of Area Development
Area development can be a very lucrative opportunity for all parties. The franchise will engage in this type of arrangement because it can help them expand their brand faster. Essentially they are outsourcing, or sub-franchising the opportunity and partnering up with an experienced business owner. The AD will be responsible for opening new locations and assisting and supporting the new franchises in their territory. In exchange for this support, the AD will receive a split of both the franchisees and royalties within their territory. This provides the AD with the opportunity to build residual income for their locations. As the royalties are typically based on a percentage of gross sales, there is a strong incentive to help franchisees in their location with their business.
Requirements to be an AD
The costs to purchase the rights of a particular territory will vary depending on the size and number of units to be developed. Since you’re typically looking at a minimum of 5 units, the initial fee can range from $100,000 and up. In terms of the total capital needed, that will depend specifically on the type of business. A successful AD will have good business skills including, sales, marketing and management. Since you’re overseeing and supporting multiple business owners, you need to have the necessary skills to oversee multiple business operations and be comfortable in managing people.
If you stumbled upon this post, you’re probably wondering what crabs and a basket have to do with buying a franchise. Let me explain…
In my franchise consulting practice, I advise people on whether business ownership, particularly “buying a franchise” is a suitable option for them. Many times during this process, clients will seek the opinions from personal friends and family during their research. While I think it’s important to seek input from your loved ones, especially your immediate family, if that’s your sole source of counsel it can soon become problematic.
You see, sometimes those close to us are afraid of our potential success. When we speak with them they can project their own insecurities, fears and desires on you… Regrettably, at times they want to hold you back.
This is what I mean by “crabs in a basket”
Have you ever seen a basket full of live crabs? If you have, you might recall what happens when one of the crabs tries to climb out. Just before they reach the top, the other crabs reach up and pull them back… it’s a vicious cycle that repeats itself over and over again. One gets nearly free and soon the others reach up and pull it back…
I see this everyday in my franchise consulting practice. In this case people are looking to own their own franchise business. They find an opportunity, do the research, determine it’s something want to do, yet their friends try to talk them out of it…
Now considering the fact my chosen vocation is franchise consulting and I earn a living via franchise sales you might say to yourself…
“Hey, you do franchise consulting… isn’t franchise consulting all about selling franchises? You obviously might be a little biased.”
If that’s what you are feeling, then your cynical like me J. Believe me, I can see why you might feel that way, however, the reality is I don’t care if someone chooses to buy or not buy. The point I am trying to make is sometimes advice from friends and relatives can sometimes be biased… and NOT in YOUR best interests.
This begs the question…why? Why would a loved one or close friend project fear, reservations, or even attempt to hold you back? The answer to me is that it’s human nature…nothing more. I don’t try to understand it, justify it or rationalize it… it’s just the way it is.
So how can you avoid the crabs from pulling you back?
This is a question I get pretty often from clients. It’s one of the reasons that franchise consulting is more coaching oriented than many people think. What I always suggest is to first, educate yourself as best you can on the opportunity and seek advice from OUTSIDE your immediate friends and family. I have a number of mentors that I constantly lean on when I need help with a situation. These people are not FRIENDS, but I do value and trust their opinions. Some examples of people that can help you make the right decision could include a business attorney, a CPA, a business coach or even someone you know who has experience in owning a business. What you’re looking for is open, honest and unbiased feedback.
If you are considering a franchise, a business, or desire anything for that matter, think about this concept. I have seen many close friends get caught in that basket… and every step they make to free themselves, they regrettably always seem to get pulled in. If you find yourself in this situation, think about this concept and focus on finding a good mentor. They can provide open and honest feedback to help move you FORWARD, versus pulling you BACK!
This is what I say when people ask me how I’m doing… while it may seem a little sassy and sarcastic… it’s the truth.
In all seriousness, I wake up each day excited at the possibilities. I love my work, I love my family and love the fact that I help people achieve their lifestyle goals…what ever they may be.
Another thing I love is fitness. While I am in franchising… I also own a fitness studio in Wisconsin. We have a great team that provides both fitness classes and nutrition programs for our members.
What’s rewarding for me, is the knowledge that my profession is 100% geared towards making people feel better about themselves… We build confidence in others! We show them they CAN!
What I find amazing… or disappointing is seeing people who are miserable with their lives. It could be their job, their relationships… or their fitness…or whatever…
Seeing people not “living their dream” can be disheartening.
The key to success and happiness… in my opinion is to avoid the personal feelings of limitation that are somewhat natural to our being. It’s very easy to say… I can’t do it…
Regrettably… in the end… you can!
If you are not living your dream, I encourage you to think why not. While it can be scary to make a change… it can also be very empowering. Think about what you really want… then go get it! You will be glad you did!