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Low Cost Franchising - Options for Affordable Franchising

While they may not household names, there are many outstanding low-cost franchises for sale that potential franchise owners with limited capital should consider. Though they may lack some of the brand awareness of the better-known franchise concepts that one tends to see on every street corner or advertised on a daily basis on TV, print, and radio, affordable franchises can present an excellent opportunity to get into business for yourself with the support of a proven business model while not taking on the risks involved in investing hundreds of thousands or even millions to invest in a more expensive (and well known) franchise system.

Expensive Franchises - Not Necessarily your Best Option

Often when people are just starting to think about investing in a franchise business, they gravitate immediately toward big, well-known brands like the AAMCO Transmissions franchise, Dollar Store Services franchise, Little Caesars Pizza franchise, Kumon Math & Reading Centers tutoring franchise, and other giant franchises they or their friends may have encountered in their daily lives.

While these major franchises enjoy incredible brand recognition among the general population (and for good reason),their popularity and national footprint can actually make them so expensive that buying into one of these franchise opportunities will be too difficult for someone with only modest savings, unless that person has access to many hundreds of thousands in investment funds from friends and family or their bank.

Fortunately, there are numerous excellent low-cost franchise options available, and those options span nearly every industry an entrepreneur could imagine.

Why Are Some Franchises Much Cheaper than Others?

With more companies trying to further their brand name yet lacking in the resources to open newer branches on their own, franchising seems a very suitable option to them. It is these growing companies which offer lower start-up costs to their prospective franchisees with other liberties such as more flexibility managing their franchises.

Each industry has its own start-up capital requirement ranges, depending on the nature of the business: is the franchise run from an office (or, even more expensive, a customer-facing retail location that requires a store build-out) or is it a home-based / online operation? Is there equipment to be purchased? What are the average number of employees a new franchise owner would expect to hire to operate the business? What are the typical overhead costs, cost of initial supplies, and so forth?

Low Cost Franchises - What are the Typical Investment Costs?

Factoring all these considerations, the cost of a new franchise could range anywhere from under $25,000 for a home based franchise to over $150,000 (or more) for many automotive franchises and retail franchises. Then there are even franchises costing over $1,000,000 (such as many fast food franchises), which could be considered cheap relative to restaurant franchises in general (many of which could cost in excess of $5 million). Therefore, every franchise should be considered in the context of its particular category.

Luckily, franchises exist in almost every industry. Besides fast food, the franchise model is gaining popularity in areas such as Advertising & Promotion, Real Estate Brokerage, Packing & Shipping and Financial Services. So the potential franchisee is not bound by a certain industry but can actually pursue categories about which they have some passion.

For current business owners, conversion franchise businesses, where a going concern converts and joins a franchise system, are a potentially attractive option, typically offering lower start-up costs as the capital for equipment, store build-out, staff recruiting, and so on has already been invested.

What Industries Have Affordable Franchises?

There are literally hundreds of business categories which a prospective franchise owner could consider, almost all of which offer surprisingly affordable franchise options. Below is a list of franchise categories offering franchise opportunities with liquid capital requirements at $50,000 or less:

Feel free to search by our list of the best franchises and you'll discover cheap franchises crossing almost every industry - you're bound to find one that matches your available capital and your interests.

Prospective Franchisees - The Financial Questionnaire

The first qualification considered and investigated is often the prospect's financial situation, so as a franchise applicant you will need to be familiar with the financial jargon that a franchisor may employ in their questionnaire.

Franchise Disclosure Document for Dummies – Part 7

In Item 17 of the FDD, franchisors are required to provide summaries and cross-references for 23 key provisions in the franchise agreement. A careful franchise prospect will have the entire franchise agreement reviewed in-depth by an experienced franchise attorney, but the Item 17 disclosures can provide a quick guide to use in a preliminary analysis of the franchise opportunity.

The Top 10 Most Famous Franchise Founders of All Time

Fearing the debate would never end (and with our coffee running out), the staff finally settled on the following (admittedly unscientific) criteria: size and longevity of operation, visibility of brand, and -- quite honestly -- how compelling we found the founder's success story. If our internal discussion about this list serves as any indication, many readers will feel we snubbed their favorite franchise founder (and someone on our staff will probably agree). So, if you think we missed someone, leave a comment below, and let the debate begin!