Affordable Franchising: Why Franchise Ownership Isn’t Just for the Wealthy

As a franchise consultant, I often encounter the misconception that franchise ownership is only for millionaires. It’s true that some franchise opportunities require a large up-front investment, especially if you’re purchasing multiple units. But franchise ownership is still accessible for people with a wide range of assets to invest. Keep reading to learn why affordable franchising can be very much within your reach.

Affordable Franchise Options

Franchising is a diverse industry , not just in terms of business sectors but also in terms of the startup investment required. Though area development often requires an up-front investment of a million dollars or more, plenty of franchisors offer affordable franchising opportunities. For instance, my own list of preferred franchisors includes a number of companies that charge just $50,000-$75,000 per unit.

If you’re looking for affordable franchise options like these, keep in mind that regional or brand-new franchisors often charge lower fees than their national or established counterparts. They are also often more willing to sell single franchises instead of requiring a multi-unit buy-in . Though the support systems at these companies are sometimes leaner than those at bigger franchisors, they still provide a business system to help make operations easy. If you have good business experience (e.g., you’ve owned a small business before or worked as a middle manager) but not a large nest egg, a regional or new franchisor may be the right choice for you.

Regardless of franchisor type, home-based franchises are also an excellent choice for affordability. Real estate usually makes up the lion’s share of a franchisee’s budget. In addition to rent or a mortgage, operating a brick-and-mortar franchise comes with the cost of utilities, security monitoring, a cleaning service, special insurance, and more. You avoid all that when you choose a home-based franchise. Not only does this decrease your startup costs, but it makes your ongoing costs lower, too.

One tip: as you’re evaluating franchises for affordability, don’t forget that franchise fees are only part of the total costs . Check your Franchise Disclosure Document carefully for other costs that might make the franchise option unaffordable for you. These might include extensive equipment or inventory requirements, high royalty rates , or high marketing fees.

Financing Is Available

Affordable franchising isn’t just about the type of franchise you choose. It’s also about how you pay for your franchise . I don’t recommend taking on excessive debt to finance a franchise purchase, but you don’t necessarily need to pay cash for all your startup costs. Affordable financing is available, including programs especially for individuals who are less likely to have extensive personal wealth, such as women, veterans, and other groups that are underrepresented in the ranks of business owners.

If you’re looking for favorable loan terms to cover part of your startup costs, start with the Small Business Administration . They have several loan programs with terms that are often better than what you might be able to obtain on your own. Some are even designed just for franchisees!

In addition, some franchisors offer in-house financing, or have special arrangements with lenders. In these kinds of arrangements, the lender may provide more favorable terms for the franchisee because of the franchisor’s reputation for thoroughly vetting applicants . Just make sure that any franchisor-connected financing program has competitive terms. In-house options are sometimes the most affordable, but not always.

You Can Pay Yourself

Also keep in mind that franchising allows for different ownership models . Franchises with a longer timeline to profitability can often be operated as a side hustle , so that you don’t have to go without income for an extended period. Franchise ownership can also be a day job.

This kind of setup is called an owner-operator franchise. It’s a common arrangement for those who buy a single-unit or home-based franchise, especially if they want an affordable franchising option that can serve as their primary income. I generally recommend this path for people who still have plenty of working years left –while it works as a second career, it’s not ideal for those who are close to retirement.

If you go this route, you’ll still need some savings or a second income (e.g., a spouse’s job) to pay your bills for a little while. But you can choose a franchise with shorter time to profitability , so that you can quickly begin paying yourself a salary.

There’s one other misconception I often encounter: that Empowered Franchisee consulting services must be very expensive and therefore are not for the average person. In reality, our services are completely free to the franchisee–we get paid by the franchisor after we find your franchise match. So if you’re looking for affordable guidance to find an affordable franchise, my co-consultant Lauri and I would love to help. Just a 20-minute call will help us figure out whether we should work together. Book some time with one of us today!

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This content originally appeared on https://empoweredfranchisee.com/ .