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.
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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.
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.
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.
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?
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.
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.
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.