Franchise clever – Low-cost opportunities

When selecting a franchise opportunity, a myriad of factors must be considered and none more so than the initial franchise fee. Quite simply if you don’t have the money, the venture is a non-starter. Gareth Samuel looks at why franchises at the lower end of the initial cost scale are attractive prospects with near unlimited earnings potential.

When one finds themself in a position, for whatever reason, that they are ready to become an investor, cracking into the franchise industry to choose the ideal opportunity can be tricky. Adverts, like the countless number in this magazine, provide all sorts of information including that vital piece – the initial franchise fee, which fluctuates massively.

If you are a prospective investor looking at a franchise with a modest budget, there are a number of high-quality and proven brands on the market today that will enable you to reap rich rewards. One such business is Ovenclean. A specialist domestic cleaning business that franchise owners operate from a fully liveried van, providing oven cleaning services door-to-door. One set of Ovenclean franchise owners, Clive and Clare Pearson, have thoroughly enjoyed running their business from day one and choosing a lower investment franchise has really paid off for them.

“Our personal happiness was at the top of the agenda when we made the decision to invest in the franchise, and Ovenclean has delivered everything we’d hoped,” Clare explains. “As a working family, being with Ovenclean has offered us maximum flexibility. We have built a successful, rewarding business with more security and much less stress than we would have done if we had remained employees in our respective sectors.”

For Clive and Clare, keeping loyal customers has been key to success. Clare adds: “The core customer base we have built up over the years has kept our business going strongly. Many of our friends in corporate jobs have either been made redundant, or live with the threat of redundancy over their heads – we just don’t have that concern.”

Low-cost franchises feature in a wide-range of sectors, proving that successful franchising does not have to cost the earth. Premier Sports is one of Britain’s leading sport coaching businesses and makes opportunities available to the right investor for less than £20,000. Equally, in the Home lettings industry, HomeXperts offer investors the opportunity to set up their own estate agent business for a similar investment fee – whatever your interest; there is a low-cost franchise to suit your need.

But as the saying goes, ‘You get out what you put in’. The issue therefore to many investors looking at low cost franchises is whether grabbing a bargain will limit their return on investment. As Jeff Elgin of Entrepeneur.com writes, the return on investment in a franchise is linked more to the continued work put into running a business than it is the money poured in at the beginning. He says: “A franchise is almost never a passive investment. Virtually all franchises assume that the owner will be investing at least some of their time and talent in the business in addition to their money. So it is reasonable to assume that an investment in a franchise should provide a return for both the money and the time that is being invested in the business.”

This theory transpires in reality too. The Christmas Decorators franchise owners trade in perhaps the most seasonal yet universal sector imaginable. Franchise owners are tasked with building a business providing stunning Christmas decoration displays to a loyal customer base and, what’s more, opportunities are available for just £15,000. The earnings potential for a The Christmas Decorators franchise owner, however, is impressive to say the least – one extremely enthusiastic franchise owner managed to register a second year turnover of £213,000 by putting in that ‘extra effort’. Often this is very much the case with low-cost franchises.

Because low-cost franchise opportunities do not necessarily come with the structure and immediate scalability of a large, high-investment business like McDonald’s or Green Square, the extra effort has to be put in by the franchise owner – often manually. This means – as in the case of Revive! SMART automotive bodywork repair franchise owner, Nathan Holmes – starting at 7:00 am and finishing at 18:00 is fully expected. Or going out to cover a coach or tutor personally when absences occur, which many LIPA4:19 franchise owners recognise as rungs on the ladder to success.

But of course for the truly committed franchise owner, and in truth these are the only ones likely to be successful, working hard in their business is not a chore but a prerequisite of investing in any business. Tom Frame, a ServiceMaster Clean franchise owner of four years in the Glasgow area, knows first hand how hard running a business is but is adamant he would not change a thing: “This franchise has done what it set out to do regarding the criteria I set out at the beginning. It has not been easy, but there again no one said it would be. It is quite satisfying to see the business grow significantly over the last four years. Year four saw a 40 per cent increase in turnover from year three, not many businesses could boast this.

“Being your own boss is quite satisfying, but as they say, the buck stops here, however the credit for building a successful business is also attributed to yourself.”

And this is exactly the appeal of a low-cost franchise. Almost every franchise offering an opportunity at the lower end of the investment level scale boasts comparable earnings potential for those who are willing to put in the extra effort to make it a success. The only obstacle standing in the way between a low-cost franchise owner and an embarrassment of riches is the limit of their own capability.