Franchises as a whole are faring better right now than independent businesses, and many are thriving. When people think about the possibility of owning a franchise, they often envision multi-million dollar investments, like purchasing a McDonald’s, but that isn’t the norm. Many people who get into franchise ownership might not need as much liquid capital to invest as they’d expect.
A franchise doesn’t have to cost millions to be profitable and create wealth. Many franchise opportunities require a total capital investment as low as $50,000. Several variables impact how much a franchise costs.
Businesses with a brick-and-mortar footprint and real estate requirements cost more than home-based businesses. When you employ a large workforce or you have physical inventory, the costs add up.
All of these factors dictate how much liquid capital you need to get started. There are many high-performing franchise businesses with low total investment and liquid capital requirements. You can find a lucrative, low-cost franchise opportunity if you know what to look for.
The total project cost will dictate how much liquid capital you need upfront. Think of purchasing a franchise like buying a home.
You put down money that isn’t borrowed, and then you take out a mortgage loan to cover the remaining cost of the home. The same is true for buying a franchise. If you go through the SBA for funding, you’re required to put down between 10% to 30% of the total project cost. It’s just like a down payment on a home, and the SBA will finance the remaining cost of the project with a 10-year note.
Many new franchise owners get funding through SBA loans. It’s a very attractive program, where the government backs banks that provide loans. With interest at historically low rates, it makes sense to take out a 10-year note as most franchise agreements are also 10 years.
In my opinion, you don’t want to come in all-cash because leveraging can be brilliant, and since borrowing money is cheap right now, it makes sense to borrow the additional funds necessary to buy a franchise. This way, you aren’t leaving yourself vulnerable by having too much “skin in the game.”
There are many ways to fund your franchise investment. The key is to research them all and find the options most beneficial for your financial situation. If you’re thinking about buying a franchise, consider working with an experienced professional. The best franchise advisors have networks of funding partners to help you find and purchase the right business for you.
A sector that will always be strong is staffing as people return to work now and in a post-pandemic atmosphere. In many industries, jobs need to be filled. By owning a staffing franchise, your job will be to fill positions of all different levels and types. From my observations, the hospitality arena, including hotels, restaurants, casinos, and nightclubs, is a great market for this right now.
As a franchisee, you’ll be helping businesses fill positions while finding gainful employment for people in the various industries you service. So it’s a win-win situation for everyone, and it has the potential for sustainability and huge growth.
Another industry that’s doing really well currently is the education sector. For instance, one of the franchises my company represents, Tutor Doctor, is a home-based business that provides tutoring services in various subject matters, which gives people a wide range of resources.
These types of tutor franchises are similar to the Uber model but are done through a technology platform, similar to Zoom. There’s a lot of room for growth, and it takes very little to no overhead, keeping the investment required very low.
Due to cutbacks and low education funding around the U.S., many schools have eliminated their arts and crafts or extracurricular programs, significantly impacting both public schools and the communities they serve. If you’re looking for a tech-savvy and successful franchise, another opportunity in the education sector is offering outsourced children’s programs. Bricks 4 Kidz, for example, uses LEGO Bricks and designs programs in the science, technology, math, and engineering fields.
Through these types of franchises, children can learn some critical and fundamental skills. Some franchises serve to replace what some public school systems currently lack by traveling from school to school. Many also hold special events and camps for children of all ages.
The senior market is another area where it takes very little capital to invest in a franchise, but the payoffs can be amazing. The 65-plus age range market is one of the most lucrative markets globally. Not only is it growing exponentially from year to year, but the services are also highly elastic, meaning that there’s an abundance of needs in the senior industry.
Most seniors would like to remain at home, but it puts a heavy burden on loved ones to ensure their safety and to care for their needs. At some point, most seniors need to transition to a facility. Placement franchisees help people select the correct type of facility for their aging loved ones, just as a real estate agent would find a new home for an individual.
These are just four types of franchises with an average total investment cost under $100,000. As you decide what type of franchise is right for you and what you can afford, keep in mind that there are also hundreds of other franchise opportunities to consider.
The information provided here is not investment or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Shared by CEO of Frannexus, award-winning franchise consultant.
For Bricks 4 Kidz – STEM-education franchise, or franchise consulting services, please CONTACT US at [email protected].