invest in low cost franchise opportunity

How to invest in low-cost franchises

Franchising in the UK is now at a record high. In the last four years the number of franchises in the country has increased by 10% and the industry now contributes an impressive £15 billion to the country’s economy every year. More and more people are choosing to invest in a franchise and increasing numbers of customers are spending their cash with franchised brands.

Franchising offers investors a number of benefits over starting their own business from scratch. As well as giving entrepreneurs the opportunity to become their own boss and improve their work–life balance, franchises also boost a business’s chances of success.

Although there are never any guarantees when it comes to starting a new venture, investing in a company with a proven track record is a good start when launching a business of your own. Brand awareness, support, training and experience all help to contribute to a franchise’s chance of profitability and longevity, making them a very attractive prospect for entrepreneurs looking for a good investment.

The main thing that prevents entrepreneurs from investing in franchises is money. The average cost of buying a franchise is £50,000, with many opportunities asking for considerably more. For lots of would-be entrepreneurs, this creates a financial roadblock that can scupper their plans of becoming their own boss for good.

Luckily for those whose ambition is larger than their bank balance, there are low-cost franchises available in many parts of the country. Offering low start-up costs and minimal overheads, these affordable investments are helping hundreds of entrepreneurs to get their foot on the career ladder every year. If you’re currently thinking about investing in a franchise but are concerned you don’t have the capital to back up your plans, a low-cost franchise could be the perfect solution.

What is a low-cost franchise?

In general, low-cost franchises are those that can be bought into for less than £10,000. There are even some franchises that can be bought for much less, with occasional opportunities available for under £1,000. This low level of investment opens up the world of franchising to a wide variety of investors. From mumpreneurs looking for a challenging and lucrative career to part-time workers who want to begin building a venture in their spare time, low-cost franchises are accessible to almost everyone.

As well as being very affordable to start up, low-cost franchises should be cheap to run. Low overheads will help franchisees to focus on the day-to-day running of the business and remove much of the financial pressure normally associated with starting a new company. This can be a real bonus for entrepreneurs with limited financial resources and can help businesses to stay afloat in their more difficult early days.

Main costs involved in starting a franchise

There are a number of costs involved with launching a new franchise. As well as paying the franchising brand for the right to use their name, branding and business model, the franchisee will need to have funds available to buy specialist equipment, purchase vehicles, hire a commercial space, train staff and carry out market research. These costs can quickly add up and it’s not uncommon for franchisees to be paying out tens of thousands of pounds before they’ve even opened their doors.

Often, low-cost franchises are small operations and will therefore avoid many of the costs associated with launching a big business. However franchisees will still need to ensure that they find out exactly how much investment is required, both initially and in the first few years, if they want to keep their business solvent. In most cases, the franchising brand will have clear financial guidelines laying out potential costs and expenses. Franchisees should ensure they’re familiar with all these expected outgoings and that they have enough cash in the bank to pay for them.

Can low-cost franchises still make money?

Although low-cost franchises don’t take a lot of investment to buy into, they can make a lot of money for the franchisee. Although exact figures will of course vary depending on the business, the brand and the investor, in most cases even the most affordable franchises should begin to turn a profit within the first two years. If franchisees work hard to grow their business, there’s no reason why a low-cost franchise can’t bring in just as much revenue as franchises that cost significantly more to set up.

What types of franchise have low start-up costs?

Low-cost franchises can be found across all industries. From cleaning, childcare and garden maintenance to pet services, finance and catering, affordable opportunities are available everywhere if you know where to look.

In general, franchises that have low start-up and running costs are those that can either be run from home or from a van. As neither home- nor van-based franchises require entrepreneurs to invest heavily in commercial space, they’re very affordable to set up and to operate.

The fewer employees a franchisee needs, the cheaper it will be to keep going. Staff wages and training costs can quickly add up, putting financial pressure on the franchisee from day one. If the franchise can be run with just one or two members of staff, or if the franchisee can run the business alone, its everyday costs are likely to be much lower. As well as limiting the amount that franchisees need to pay out in wages and training costs, employing fewer staff means there’s less need to purchase additional company vehicles, invest in a larger office space or buy computers and other pieces of equipment for staff to use.

Franchises that don’t require investors to purchase specialist equipment are also generally more affordable than those that do. Specialist equipment inevitably costs more to buy or to hire than standard pieces of equipment, so if you need to hire or buy some for your franchise, your start-up costs are likely to be higher. On the other hand, if you only need a computer and an internet connection, you’ll be able to get your business off the ground with almost no extra investment.

Finding the right low-cost franchise opportunity

If you’re interested in investing in a low cost franchise, the first thing you need to do is narrow down the available opportunities. Take a look at the different industries and businesses that are offering investment opportunities to see if there are any that match your skills or previous experience. Although previous experience isn’t always necessary, there are some instances where franchisees are required to have some skills, qualifications or expertise in their chosen area.

Even when buying into a low-cost franchise, money is going to be important, so make sure you look for an opportunity that’s well within your budget. Most franchises will list their costs on their ad, so take a look at the break down of prices before you apply.

If you’d like to find out more about the benefits of investing in a franchise, or if you want to start your search for a low-cost franchise of your own, take a look around our site or get in touch with a member of our team today.

Franchise Enquiry Form

Searching for the ideal franchise? Don't search for hours use our Free Franchise Matching Service. Just complete the form below & receive details of franchise types you select PLUS a copy of our FREE Franchise Guide straight to your inbox!

Yes I have read and accept the Franchise UK Privacy Policy found by clicking here and am happy for my contact details to be shared with franchises seeking to recruit new franchisees
I would like to receive the Franchise UK newsletter containing the latest franchise opportunities and news