Is It Smart to Invest in a Low-Cost Franchise?

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low-cost franchise

In short – yes! Some people have preconceptions about low-cost franchises, but investing in these economical opportunities can be a fantastic way to boost your career for a limited sum. We’re here to show you why you should consider running your own business with an inexpensive franchise.

You might think franchises with a high initial investment price would naturally create bigger profits than more economical enterprises – but you’d be wrong. Low-cost franchises can be just as lucrative as high-cost opportunities. The trick is to look out for the ones with good potential.

We’ll run through the factors to look out for when choosing a franchise. But first, here are some of the advantages of joining a low-cost franchise…

Benefits of low-cost franchises

  1. Many can be run from home – The majority of low-cost franchises are businesses in the service sector that can be operated remotely. They’re inexpensive because you don’t need to pay pricey rental fees, fit-out costs or the taxes that go along with them. You may not even need to splash out for a ‘grand opening’. If you want to spend more time with your family or fancy cutting out your commute, a low-cost, home-based opportunity could be a bonus.
  2. Many can be run part-time – Depending on the business, you may not need to work full-time if you don’t want to. With a low-cost franchise, you can often select your working hours to complement other commitments, so you can always be there for the daily school run or lunch dates with your friends.
  3. You can reach your break-even point quickly – The less money you put into your business in the initial stages, the less you have to generate before you start making a profit. As a result, many low-cost franchises reach their break-even point sooner than their more expensive counterparts. If you want to feel stable and secure in your investment, a franchise on the cheaper end of the scale will help you avoid working with scary numbers.
  4. Lower investment doesn’t equal lower profits – There is no correlation between the amount of money invested in a franchise and the amount of money it can make. In fact, investment costs are usually dependent on the industry. Restaurants and retail franchises are more expensive because of the steep rental costs and the outlay required to fit and stock the premises. Meanwhile, some franchise businesses in the service sector can be launched with just a laptop and an internet signal.

Factors to look out for

Low-cost franchises can be fantastic if you want a flexible business with the potential for a high return on investment – but your success relies on you making an informed decision. Here are the most important aspects to look out for when you’re choosing your franchise.

  1. Make sure the franchise is robust – Many inexpensive franchises offer good value for money, but others are a risky investment. Not every franchise opportunity is a good one, so you should take the time to do a lot of research into both the business and the industry it belongs to. This will give you the knowledge to make an informed decision.
  2. Make sure there’s a good level of support – Some franchises are cheap because you don’t need significant infrastructure to get started; others cut costs by offering poor training schemes or small amounts of ongoing support. Make sure you avoid the latter type of franchise. The franchise model as a whole is effective because you can start a business with little or no experience by following set guidelines. The franchisor support is invaluable, so make sure you know exactly how much you’ll get once you’ve signed on, particularly if you have limited experience or industry knowledge.
  3. Be prepared to market your business well – As a work-from-home franchisee, you may lose out on the customer footfall and brand awareness you would’ve had if you’d rented a business premises. So, you’ll probably need to work with your franchisor to build a promotional plan and make sure your business is recognised by consumers.
  4. The harder you work, the more successful you’ll be – Part-time businesses are the perfect fit for many entrepreneurs, but it’s worth mentioning that the more you put into your business, the more it will flourish. This factor can be a huge plus point – you’ll invest in a business and have the ability to control how many hours you work and how much money you generate.

Business sectors to consider

Here’s a quick rundown of some of the business industries you might like to consider if you’re on the lookout for a low-cost franchise investment opportunity. If you really have a limited budget, you may need to rule out restaurants, gyms and retail businesses, in favour of these ones:

  • Childrens franchises – If you’re after a fun and rewarding franchise opportunity, you should take a look at children’s clubs, toddler groups and swimming businesses. You can sign up for a minimum investment of just £3,000.
  • Tutoring franchises - Parents are becoming increasingly willing to pay for tutors to help their children improve their grades, and educational businesses are booming. And you can launch one from the comfort of your own home. Become a private tutor and help the next generation for a start-up cost of less than £3,000.
  • Cleaning franchises – There are plenty of options when it comes to launching a cleaning business. You can target domestic or commercial customers, offer a general service or specialise in one area – you can even buy a van and operate a mobile company. Opportunities start at around £3,000.
  • Snack and vending machine franchises – This sector is a little niche, but if you can find a business that works for you, it’s worth taking a closer look. Franchises like Snak Appeal, Snack Aid and Tubz all require initial investments under £3,300.

If you’ve got a limited budget, you may also want to browse home-based and van-based franchises.

Low-cost franchises can be a fantastic investment

Like any business, low-cost franchises come with their own challenges – you’ll need to choose wisely and work hard. But there’s potential to make a fantastic return on investment if you get the formula right. Take a look at our low-cost franchise opportunities in the UK to get started.

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