8 Effective Cost Cutting Strategies for Franchisees

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cost cutting franchisees

Joining a franchise business can involve a significant investment, and whether you use your own savings or a bank loan, you’ll want to minimise your outgoings as much as possible. Here are some of the best cost cutting ideas for franchisees.


Minimising your expenses as a franchisee will help you recoup your investment and reach your break-even point quicker than you otherwise would. When it comes to joining a franchise, you usually get what you pay for – the bigger the brand, the steeper the investment costs. But there are ways you can reduce your outgoings as a franchisee. Below you’ll find some of the best cost cutting strategies out there.

Cost cutting strategies for franchisees

1. Choose premises with a long lease contract

One of the first steps you can take as you set up your franchise unit is to look out for businesses premises with long lease contracts. For many franchisees, short-term leases might be more attractive. They don’t lock you into the contract for a long period of time, instead offering the chance to upgrade to a larger or more visible site as the business grows.

But initiating a longer lease eliminates the fees you have to pay when it comes to signing new contracts or renewing old ones. Over the years, these fees can stack up, so it’s worth looking for a property that will be suitable for your business as it grows. You’ll never know for sure what the future holds for your franchise unit, but you can make sure the site has good potential and you’re happy with the rental costs.

Of course, if you’re setting up a home-based or van-based franchise unit, you can avoid these rental payments and the associated costs altogether! Working remotely is one of the best ways to reduce your monthly outgoings.

2. Shop around

Whenever you’re looking to rent a premises, buy a product or make any kind of investment, it’s usually a good idea to shop around for the best deal. You’ll probably be surprised by the difference in prices you’ll find.

If you’re purchasing equipment, look at a number of different suppliers. If you’re getting construction work done, get a few different quotes from various builders. Most businesses offer free consultations and ‘no-obligation’ quotes, so this initial process shouldn’t cost you a penny.


3. Buy second-hand

It’s likely your franchisor will have set out guidelines when it comes to buying equipment, fixtures and fittings for your business premises. But some franchisors will be happy for you to buy second-hand items as long as they adhere to set regulations. It’s worth discussing this topic with your franchisor before you sign on the dotted line, as buying pre-owned items could decrease your expenses significantly.

4. Finance your equipment

This cost cutting tip won’t reduce your overall investment, but it will minimise your initial payments. By choosing to finance a product over several months or years, you can save some of your outgoings for when your business is in a more financially stable position. When researching lending options, make sure you’re getting good value for money. You don’t want to be locked into an agreement with unreasonably high interest payments, as this could stop you turning a profit further down the line.

5. Apply for grants

You may not realise it, but there are a number of business grants available to people developing new start-ups. These offer money to entrepreneurs to help them reach their break-even point quickly. You may be eligible for one of these grants, so take the time to research the financial support out there and see whether there’s one to suit your business.

6. Choose a franchise with a POS system

This is a fairly specific cost cutting tip, but it does hold significant advantages for those who use it. If you’re entering into the retail, hospitality or service sector, look out for franchises using a POS (or Point Of Sale) system. This clever tool collects valuable information about your customers and their purchases to help make your sale processes more efficient. So, having the chance to use one could have a big impact on your income and profitability.

[Retailers] run the risk of slowing down their operations and missing critical data that could help them grow their business faster. Having key insight about their customers, their inventory level and when they should order more supplies are examples of information a POS provides. – Marylise Tauzia, Product Marketing & Evangelism Lead, Square

7. Source products from wholesalers

Most franchisors like to stipulate where their franchisees get their products from. The owner of a restaurant brand will want all its locations to serve a consistent menu of dishes made from ingredients sourced from the same suppliers. And every fashion store in a national chain is likely to have the same fixtures, fittings and furniture.

But this doesn’t necessarily mean you won’t have the chance to source certain items from wholesalers. Talk to your would-be franchisor before you invest in the business and ask about supplier regulations. If they allow you to bulk-buy products, you may be able to save money in the long run.

8. Be frugal when you can

Make it your mission to save every penny you can! In fact, this should be a long-term strategy, as you never know when external factors might cause economic issues for your business – just take the coronavirus pandemic as an example. Whenever possible, review your expenditure and think about whether your planned purchases are vital to the running of your business.

Do you really need to hold a social event at the end of every month, or buy that new gadget for everyone in the office? Spend some time considering how you can balance frugality with business efficiency and work culture. And this tip is especially relevant when you’re first setting up your franchise unit. Construction firms and interior designers can charge high rates for jobs you could do yourself. If you have the time to paint your premises yourself, for example, you could save thousands of pounds to put into your business in the future.


Take care of the pennies and the pounds will look after themselves

Financing a franchise unit and finding cost cutting solutions can be a complicated and stressful process – but we’re here to help. You’ll find lots of resources on this subject in our article catalogue. Just use the search bar to find the topic you’re interested in.

Alternatively, take a look at some of our low-cost investment opportunities. Our franchise prices start at just £1,000, so they’re ideal for those with a limited budget.

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