7 Questions to Ask Before Purchasing a Low Cost Franchise

Posted on: March 20, 2020 at 5:00 PM

7 Questions to Ask Before Buying a Low-Cost Franchise

As an entrepreneur or anyone looking to start your own business, a low-cost franchise can be an appealing option. Not only do you get the proven systems, established infrastructure and other benefits of a franchise, in most cases, you pay a fraction of the cost.

With so many low-cost franchise options to choose from, it is important to understand the differences between each and what you will actually get in return for your investment.  

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Put simply, not all low-cost franchises are created equally. Some may have a low initial fee, but the ongoing fees and royalties are so high that it isn’t that affordable in the end. Others might be affordable but don’t provide much in terms of support or infrastructure.

Before purchasing a low-cost franchise, you should determine what your greatest needs are as a new business owner and how your franchise can help you meet those needs. 

Below, we go over 7 questions you should ask a franchisor before purchasing a low-cost franchise to make sure you find the best franchise for you.

1. How Much Training Will I Get?

Low-Cost Franchise

A solid foundation is key to a successful business, and great training is key to creating a solid foundation. Even if you already have existing experience in the industry of your business, you will still need training on the processes and tools used by the franchise to become a travel agent.

It’s a good idea to assess the level of training you will need before you purchase the franchise. If you have no previous business experience or experience in your industry, you’re probably going to need more training. Make sure the franchise can provide that level of training to you, so you feel confident in running your business.

On the other hand, you may come into a franchise with lots of previous experience. You’ll want training on the tools and processes, but you may not need as much help learning about the industry. Make sure the franchisor’s training is flexible enough to allow you to get your business up and running quickly and you won’t be bogged down in mandatory training requirements that don’t apply to you.

A good low-cost franchise will be invested in your success and won’t cut corners when it comes to your training.


What the best low-cost franchises provide

  • A thorough, hands-on, in-person initial training
  • Robust online training courses that can be accessed at any time
  • Flexible training tailored to your needs
  • Consistent virtual and in-person trainings for continued education
  • Strong relationships with suppliers and access to supplier training resources
  • A yearly convention
  • The cost of training included in the initial franchise fee


2. Will I Have Access to Support?

Low-Cost Franchise Support

Without successful franchisees, a franchise can’t exist. Therefore, it is in the franchisor’s best interest to provide great support and help grow great franchise owners. Unfortunately, many low-cost franchises don’t have the resources needed to provide high quality support.

When evaluating a franchise, it’s important to know where you can turn for help when you need it and what level of help will be provided.

How will the franchisor help if you have an issue with a supplier? What if you are having trouble with your website? What if you want to talk to someone about setting and achieving sales goals?

The best support is proactive, ongoing and tailored to your individual needs, and if you have a quick question, you should be able to easily get a quick answer.

Determine if a franchise has the resources in place to provide you the support you deserve.


What the best low-cost franchises provide

  • A large, experienced support staff team
  • A personal business development coach who helps you establish and grow your business
  • A tailored success plan based on your needs and goals
  • A regularly staffed support line
  • A quick response time to urgent matters
  • An online resource library that can be accessed at any time
  • Regular training on new products and technologies
  • A corporate office dedicated to your success


3. What Technology Do You Provide?

Low-Cost Franchise Technology

Whether it’s a low-cost franchise or a franchise with high capital investment, technology is key to the success of your business. It should allow you to work more efficiently and ultimately help drive sales.

It is important to understand what technology your franchisor will provide to you, how it will help you run your business and if there is anything you will be expected to source on your own.

Costs can add up quickly if you are expected to build your own website, source your own customer relationship management tool and pay for your own email automation platform. The best low-cost franchises will supply these tools to you and have in-house technology teams dedicated to creating new tools to help you drive sales.


What the best low-cost franchises provide

  • An in-house technology team that is constantly innovating
  • Proprietary tools designed to help you drive sales
  • A custom Customer Relationship Management (CRM) tool
  • A personalized website
  • Custom email sending and digital marketing automation platforms
  • Consumer apps to drive sales
  • Mobile technology that lets you run your business from anywhere
  • Ongoing technology training
  • No additional technology fees


4. How Much Marketing Support Do You Provide?

Low-Cost Franchise Marketing

Marketing is important for any business’s success. Marketing attracts customers and customers equal sales. But coming up with a marketing strategy, designing and producing marketing materials and figuring out which marketing efforts work best can be time consuming and expensive.

It’s important to know how your franchise will support you with marketing—what marketing, if any, will your franchisor do on your behalf and how much will be left up to you and what costs are associated with marketing?


What the best low-cost franchises provide

  • An in-house marketing team
  • Customized, free direct mail pieces designed, printed and mailed on your behalf
  • Weekly email blasts to clients featuring deals and specials
  • A free print-on-demand marketing and communications tool
  • An initial mailing list of names and addresses
  • Segmentation data on your clients to assist in more targeted marketing efforts
  • Social media management support
  • No hefty marketing fees


5. What Do Other Franchise Owners Have to Say?

Low-Cost Franchise Other Franchise Owners

It’s easy for a franchisor to paint a rosy picture about their franchise, so it’s a good idea to seek a second opinion. Current franchise owners can provide a lot of insight and give an honest opinion of what it’s really like to run the business. Seek out reviews or talk with current franchise owners directly to see how they feel about the brand and what it’s like to be a franchisee.  

Most franchisors can provide you a list of current franchisees so you can reach out and talk to them. Franchise specific review sites, like Franchise Business Review, can also help give you honest insights about a franchise.


Franchisees at the best low-cost franchises

  • Are happy and engaged
  • Feel supported
  • Feel a connection to the brand and the franchise network
  • Speak highly of leadership and the direction of the company
  • Feel the franchise has their best interest in mind
  • Are taught what is an FDD

6. What Are the Fees?

While the initial franchise fee may be low for many low-cost franchises, it is important to be aware of any additional fees or costs required to open and operate the business. Are there marketing fees? Ongoing royalties? Real estate costs?

These fees can add up, and a seemingly low-cost investment can balloon quickly. 

Make sure to closely read the Franchise Disclosure Document (FDD) so you fully understand all the fees you will be responsible for.


Fees to consider with a low-cost franchise

  • What is the initial franchise fee?
  • What is the total investment necessary to begin operations?
  • Are there real estate costs?
  • Are there build out costs including furniture, fixtures and equipment?
  • Are there technology or marketing fees?
  • Are there insurance costs?
  • What is the royalty structure or commission split?
  • What is the length of the franchise agreement?
  • Is there a franchise renewal fee?


7. Am I Passionate About This?

Low-Cost Franchise Happiness

If you’re going to be investing money into a business and working at that business every day, it should be something you are passionate about. There are lots of great low-cost franchises out there, but if you are not passionate about the product you are selling and the work you are doing, it is going to be hard to find success.

Consider your personal values, what is most important to you and what makes you happy. Then, make sure the franchise you are investing in matches those values and can help bring you personal fulfillment.


What the best low-cost franchises provide

  • Values aligned with your personal beliefs
  • A product you believe in
  • Happiness and personal fulfillment
  • Positive work-life balance
  • A welcoming and inclusive culture


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