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Guest post by: Michael Hemenway Become an Author

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People react in two ways when they hear the term low cost franchises. Some think that these franchises offer low support while others think that this type of businesses will result in low income. But both of these thoughts are wrong. A low cost franchise neither means low support nor denotes low return of investment. A low cost franchise can be said to be a franchise whose start-up cost is something below $20,000. But there are some low cost franchises that cost higher than this and are still considered as low cost. This is because of the category to which they belong. There are certain categories that need huge start-up, because of the big space they require to run their business properly (like in sit-down diners and retail outlets).

Whatever is the category, the low cost franchises are the preferred choice of many because of their affordability. The cost of these franchises are generally low, because they are either service-based franchise opportunities (hence, no need to buy equipments and products) or home-based franchises. The latter have low overhead charges, because there’s no need to go for real estate renting or buying. Another reason that makes a low cost franchise economical is the market position of the franchise. If the franchise is new and emerging, it may have low franchise fee and other fees, thereby making it a low cost franchise. A word of caution here; such franchises sometimes have hidden costs, so reading the UFOC and the franchise agreement thoroughly is highly recommended.

Now, what to look for in a low cost franchise? First and foremost, take a look at the support system. Low cost must not come with little or no support. Though extensive support may be missing, but it should have an effective training program, on-going support and grand opening assistance. There are many top franchises that are low cost franchises, but offer extensive support like others in the field. Then consider the royalty fee. If it’s too high, then you won’t gain much from the business, no matter how low its start-up cost is! Another thing you need to check out is the demand of the concept in the market. The business must be there for long and should not be a “fad” that goes down within some years!

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