Every franchise has a different set of opening franchise costs because each franchise has its own unique set of execution requirements.
When it comes to finding a franchise for $50,000 or less, one of the first things to look for are franchises that don’t require the franchisee to acquire a retail or warehouse space. Finding a franchise that you can run from your home can help you keep your start-up costs low.
Real estate can be—and typically is—one of the most expensive items in starting a business of any kind. In addition to the saving on real estate, franchises that can be run from a home (or vehicle) offer start-up savings by not requiring, or requiring less for, signage as well as office décor and supplies too.
(Note: When reviewing a specific franchise’s Franchise Disclosure Document, the breakdown of opening costs are covered in detail in Items 5 and 7.)
Keep in mind, some home-based franchises can have business activities (such as completing a service or a sales visit) take place at other locations. Franchise opportunities that rely on franchisees primarily traveling around to different customers to complete their work can be referred to as mobile franchises as well as being called home-based.
As discussed in our Home-Based Franchise Industry Report 2019, mobile franchises is an area that is steadily growing right along with the rest of home-based franchises. There are several reasons for this growth, but here are four of the top benefits of mobile franchises, as stated by Thomas J. Kasbohm, the Franchise System Director at Snap-on Tools:
- Enhanced customer service and convenience. Your “showroom on wheels” allows you to deliver your customers immediate satisfaction in both products and service.
- Control your own schedule. As a mobile franchise you determine when to call on your customers and do not have to wait for customers to visit you.
- No real estate hassles. You typically are not required to purchase or lease real estate to operate a mobile franchise.
- You won’t be looking at the same four walls. You control the route driven, so your view and experience is ever changing.
And just because you are seeking a franchise that doesn’t cost a lot doesn’t mean you won’t have options. Franchises that can be started for $50,000 or less can be found in a wide array of industries, including:
- Accounting/financial
- Administrative support
- Children’s
- Cleaning
- Fitness
- Food
- Home care
- Home services
- Marketing
- Pet care
- Senior care
- Travel
And more!
Encountering Business Opportunities in Your Franchise Search
Oftentimes, when searching for franchises $50,000 or less, you will run into a different subset of opportunity: a business opportunity.
A business opportunity (sometimes referred to as a “bizopp”) is the sale of a system the licenser has cultivated and is confident will be profitable when replicated, similar to a franchise. However, once the purchase is finalized, and training—if applicable—is completed, the relationship is usually over. Because they usually don’t come with the typical training and support franchises offer, business opportunities tend to cost less than franchises.
However, just because it’s classified differently doesn’t mean that a business opportunity can be any less fruitful than an opportunity classified as a franchise. Both require the buyer to be dedicated and hard-working to find success.
Both of these approaches to making a business investment are suitable for those who don’t have their own unique product or service to bring to the marketplace, but still want to run a business. The greatest distinguishing factor between the two is how much support you desire.
If you’re simply looking for a jumpstart and desire more flexibility, a business opportunity could be the route for you. If you’re looking for consistent support, and can handle more restriction (or desire more guidance) in the procedures of your business, a franchise might be the path for you.
Staying Away from Scams
Similar to how franchises are subject to providing a certain level of disclosure to buyers before agreements are signed, business opportunities are also—to a certain extent.
To combat the risks, the FTC has taken steps to crack down on businesses that have provided false claims over the years. They are also working to educate those looking into business opportunities with a website with tips on spotting a potential fraud, and ways to contact them if you believe you’ve been misled by a company offering bogus business opportunities.
In addition, back in 2012 the Federal Trade Commission did enact the Business Opportunity Rule. Under the rule, sellers have to give you—the buyer—a disclosure document overviewing your potential investment before any binding agreement is made.
The business opportunity disclosure document is required to be produced in any language that a business opportunity is promoted in, and must be updated every quarter year.
Although not as thorough as the FDD—franchise disclosure documents can be hundreds of pages in length while business opportunity disclosure documents can be as short as one page—the information from the document can be used to fact-check what the seller tells you about the opportunity and what you’ve discovered from your own due diligence (aka research).
It’s also worth noting that simply because franchises currently have more federal regulation than other business opportunities doesn’t mean that they are without risk. There are several risks to owning a franchise as well. For instance, there could be expenses for equipment or materials needed to run the business that aren’t specified or made clear in the franchise disclosure document that mount up.
When opening any business, regardless of price point, it’s paramount to do your research and understand that there is risk involved—no matter the classification.