Why Small Franchises Are a Good Investment

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Why Small Franchises Are a Good Investment

Many people dream of starting their own business but are held back by lack of funding or the fear that it could all go wrong. Being an entrepreneur comes with an element of risk, but there are ways to boost your chances of success, such as considering low-cost franchise opportunities. By starting out with an investment that is affordable, new franchisees can create a profitable business while they build their confidence and experience, before expanding the business or buying a bigger franchise for sale further down the line.

Franchise businesses with a small initial franchise fee can often be operated as a part-time job. But will a franchise that is run on just a few hours a week be profitable? And will it be profitable enough to justify the time and money that needs to be invested in the first place?

The answer to both questions is yes. There are plenty of franchises that can be very lucrative but only require a small investment and need just a few hours a week to run. This doesnt mean that the business demands lower levels of dedication, hard work and passion; rather, it probably involves skills that its franchisees already have, and does not require the purchase of expensive equipment.

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Advantages of Low-Cost Franchises

  • Generally, low-cost franchises can be operated from home. That means the set-up costs are lower and the ongoing overheads almost non-existent. No extra employees are needed, so the costs associated with employees, such as insurance, are eliminated, so it is easier to make a profit in a short space of time.
  • When you buy a franchise that has an affordable franchise fee, its more than likely that youll be able to run the business on a part-time basis. Doing so will enable you to earn extra income whilst investing in your future. In the long run, this is much more profitable than simply getting a traditional part-time job to subsidise wages from a full-time job.
  • Having a second job within the franchise network can offer security in times of economic uncertainty. By investing in a part-time franchise, you have a safety net, should your primary job come under threat of redundancy.
  • Low-cost franchise opportunities also offer you the chance to try out the franchise model before you decide to expand your business or commit to a more expensive alternative. Launching a business can be very daunting, so starting small with the option to grow takes away some of the fear and uncertainty that more expensive franchise opportunities can bring. There are even a few franchises that give you the opportunity to try before you buy with a trial period before the franchise agreement is signed.

Disadvantages of Low-Cost Franchises

There are some things that you should consider before investing in a low-cost franchise:

  • Although low-cost franchises can give great returns on investment, the earning potential can be limited compared to more expensive franchises.
  • The possible cap on income might mean that you need to continue working a full-time job. As a result, you may end up working long hours, which leads to increased stress levels for you and your family.

However, the advantages certainly outweigh the disadvantages of investing in a small franchise and, of course, there are many advantages to franchising in general.

Advantages of Franchising

  • Youll get access to a comprehensive training programme that provides you with the skills needed to run the franchise successfully. Most franchises provide an initial training scheme as well as ongoing training.
  • Your business is less likely to fail if you start it through a franchise. This is because youll be taking on a tried and tested business model that has been perfected over the years the franchisor has developed industry knowledge and experience.
  • You are more likely to secure funding from lenders if you open a franchise business than if you start an independent business from scratch because youll be seen as less of a risk.
  • Being part of a franchise can provide economies of scale when buying stock or equipment. Because the franchise will have increased purchasing power with certain suppliers, discounts can be obtained.
  • Youll receive help with advertising and marketing. It can be tough for an independent business to build up a customer base when they are just emerging in the market, but franchisees are part of a recognised brand that is promoted both locally and nationally.

Low-Cost Franchise Opportunities

The good news is that there are plenty of low-cost franchises out there that you can get involved in. In fact, you may not realise that you can start your business for under £2,500. Lets take a look at some of the cheapest franchises currently on the Point Franchise books.

One Delivery

This delivery business has the lowest minimum investment amount of any franchise on our site. Investors can devote just £495 to their new business venture but bear in mind that you will have to pay £1,995 in franchise fees in order to access the tools and support provided by the franchisor.

However, youll still invest under £2,500 in a One Delivery business, which makes it highly affordable as a franchise. The business states that across its network of franchises, it handles over £1 million worth of orders every month, which means you could make up to £50,000 in revenue after two years.

One Delivery was established in 2013 and now operates more than 100 franchised branches across the UK. It delivers dishes from independent and chain restaurants, as well as famous fast-food restaurants such as KFC, Burger King and McDonalds. Customers can then enjoy their favourite food in the comfort of their own home, in more than 65 cities, from Cardiff and Brighton to York, Leeds and Aberdeen.

If you join One Delivery as a franchisee, youll be treated to a comprehensive induction scheme, which gives you access to a training programme and a dedicated franchise manager to support you throughout your time with the franchise.

By investing in a franchise as cheap as One Delivery, you can minimise your chances of insolvency, as youll only need to make a small turnover in order to cover your set-up costs. Although you will be required to pay ongoing royalty and marketing fees, it is unlikely that you will struggle to afford these, as you should earn enough money to easily cover these on top of your initial investment debts.

Snak Appeal

If youd like to start a business and give to the local community, you should consider franchising with Snak Appeal. This business was launched in 2008 and, since then, it has been selling sweets and snacks from branded boxes located in offices and public places, the proceeds of which go to charity. It has developed its offering over the years and now provides healthy snack boxes with gluten-free and wheat-free products, as well as more indulgent ones. This means it can reach new customers, in gyms, schools and doctors surgeries.

It is a little more expensive than One Delivery, as the minimum investment stands at £2,000, but there are no franchise or management fees, so youll only have to pay £4,816.50, which includes your minimum investment amount of £2,000, plus your charity boxes and stock. This means you can make over £30,000 as a franchisee. Whats more, if you are unable to sell any amount of stock for any reason, Snak Appeal offers to buy it back for the same price you bought it for.

When you join Snak Appeal, you can be sure that youre investing in a worthy franchise, as it is the leading cause-related marketing company in the UK and an associate member of the British Franchise Association (BFA). The advantages continue; Snak Appeal uses an easy-to-learn business model that you can pick up in just one day of training. Also, this is a home-based business, so you can operate it from wherever you lay your hat. In the UK alone, more than 65 investors have already taken advantage of Snak Appeals franchise model; if you would like to follow in their footsteps, you can find out more about the opportunity on its profile page.

Diamond Home Support

This is an unusual business in that it gives its franchisees the choice to offer one or more of its services in their territory. In other words, you can provide domestic cleaning services, gardening services or home help when you set up a Diamond Home Support business.

In terms of cost, youll be able to get up and running for around £5,000, as both the minimum investment and franchise fees stand at £2,495+VAT. This places a Diamond Home Support franchise next to Snak Appeal when it comes to affordability. If you choose to join Diamond Home Support, youll be joining a network of more than 70 franchisees based throughout the UK.

This franchise doesnt leave its franchisees in the dark when it comes to support. New recruits should expect an introductory package that includes an exclusive territory of around 100,000 households, comprehensive training and a six-month marketing launch campaign. Once your business is up and running, youll gain access to Diamond Home Supports intranet, where you can find training videos, webinar events, marketing materials, recruitment tools and forums. On top of this, you can attend regular training sessions, as well as regional and annual meetings.

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