Determine the franchise cost that best suits your needs
The cost of the franchise can and will determine the length of your time in business
There are several key factors when considering the initial franchise cost of any business. Determining your investment will be based on your specific goals with that particular business model. Know the amount of marketing costs, the initial configuration of the business (materials, equipment, inventory, personnel, insurance, etc.), your competition, whether local or virtual, and most importantly, the ROI (return on investment ).
The initial cost of a franchise can see a new business owner get a quick return on their investment or a possible positive return on investment that can be delayed for years to come.
Unfortunately, the current economic situation that not only this country is going through, but also all other countries in the world, also has a determining factor in the duration and profit margin of any young franchise. But there are some industries where your initial franchise cost is still considered in the profitable range with an even better ROI than traditional franchise models.
Let’s go over a few.
A Franchise Cost Comparison of Several Popular Industry Models
Here is a brief breakdown of some business models ranging from the highest franchise cost to the lowest. The first is:
- Fast food franchises While most people shop for fast food more often than the typical restaurant, the idea of investing in a McDonald’s, Burger King, and maybe even Dunkin Donuts franchise may seem like a lucrative franchise to invest in. But consider this, the typical fast food chain restaurant will cost on average between $ 80,000 and $ 100,000 initially. While you are still on a budget franchise cost For most small business owners, the chances of finding available capital and investors willing to invest their funds in a recessionary economy are extremely difficult.
- Typical restaurant – While still being average franchise cost From $ 80,000 to $ 100,000 to start, the difficulties increase in maintaining a profitable business. Long working hours, fast paced environment, tons of staff members, not to mention the high cost of operations to keep a restaurant in proper order with health code regulations, the franchise cost keeps increasing. Not to mention, seeing a positive ROI averages between 7 and 10 years, while the research that has been done shows that the average business only stays open for 3 to 5 years. Something to really consider!
- Department store Although the average person will always take the time to visit a department store considering having a difficult personal financial situation, the cost of maintaining a department store inventory can only be a little overwhelming. Not to mention, the cost of the initial franchise can hit the $ 1 million mark. Oh! Personnel costs, utility costs, and business expenses can reach indeterminate heights that even department stores have not been able to maintain. Circuit City stores are a great example. As a child, I remember visiting numerous Circuit City stores to recently learn of their bankruptcy. Another one to see the difficulties of this economy is Ashley Furniture Stores. There are all but a few left and before long, there will be none left. Really sad considering I buy ALL of my furniture from Ashley’s.
- Virtual business – As difficult as it may seem to some small business owners, the virtual world is among us. From browsing the web on your PC or MAC, to surfing online using your smartphone, most of the new customers are gained through the use of the almighty internet. Considering a low cost franchise (averaging between $ 2,000 and $ 20,000 depending on the type of top-tier business), the unlimited reach to attract customers and build a loyal following for your franchise brand is extremely powerful. On average, the most profitable virtual business models have NO inventory, NO overhead, NO large franchise costs, NO rent, NO insurance, and most of all, the ability to set your business hours however you want. And even in the current economic crisis, the virtual industry has had very little of our financial crisis considering the cost of franchising, while the typical franchise literally struggles daily to keep its doors open. Talk about stressful when you, as a franchise owner, have the responsibility for the financial downfall of those below you!
The cost of the franchise is not all that it seems
As you read earlier, there are several facts to consider in the cost of a franchise that can be extremely important and very dangerous if not properly analyzed and investigated. But is that all it takes to own a franchise?
Obviously not! The most important cost factor to consider is the actual physical time you will spend building that particular franchise.
As an entrepreneur, you most likely already realize how much dedication it will take to create a successful business. But knowing and implementing that devotion, 16 hours a day, sometimes 7 days a week, can be a bit overwhelming both physically and mentally.
Above all, this is exactly why I personally, as an entrepreneur, placed this as my main focus and couldn’t imagine having to stay away from my growing family for that long period of time. I placed my investment in the virtual online business model and I suggest you do the same.
To view and learn more about the low-cost franchise business model that has built hundreds of successful business owners around the world, visit the link below.
