Guide to Franchising: What Does it Cost to Start a Franchise

If you’re looking to become your own boss, you might try looking into franchises. There are a lot of franchise opportunities around the UK and the rest of the world that cover numerous niches and industries. Finding a franchise isn’t going to be a challenge, but finding the right franchise for your skills and your budget could be. Read this guide to explain you through the process and help identify what is the cheapest franchise to open.

There are many aspects of a franchise that may make it more or less suitable for you. A classic example is whether or not you have experience in a certain niche. Another consideration is whether you have the financial resources for the franchise.

What is the cheapest franchise to open

Why financial resources are essential for your franchise opportunities.

Financial resources are required for three main areas when it comes to buying a franchise. The first is the fee that you pay to buy the territory and rights to the brand. This cost is known as the franchise fee and is often the highest expense when starting your business.

You will also need to buy equipment to start servicing customers. These startup costs can also be expensive. Your franchisor should be able to guide you on a rough estimate for items that you will need to buy.

Finally, you will want to include costs for marketing. These are unknown costs and are continuous. Some franchises might need limited marketing because the brand is already well-known, well-respected and has had a presence within the area for a long time.

Other franchise brands might have had no presence within a territory. Therefore, potential customers might not have any knowledge of your services/products. If this is the case, you will need to invest more time and money into your marketing.

There are also ongoing costs, with franchisors requiring a percentage of your revenues every month. The revenue share can vary from franchise to franchise.

With all these potential costs in mind, the question ‘what is the cheapest franchise to open?’ is often asked.

what does it cost to start a franchise

What is the cheapest franchise to open?

There are many factors to consider when looking for the cheapest franchise to open. You could look at the franchise fee. This upfront cost depends on the brand’s reputation and the costs and the investment the franchisor makes in your business.

Some franchisors will offer you a single price and will include other costs within the franchise fee.

However, there are likely going to be some setup costs. These costs could be as little as a van with some equipment, to a building with staff and equipment to help them work. The larger the franchise, the more setup costs you’re likely to have. Some expenses can be covered by a franchisor, but they won’t take all the costs. This can be overwhelming so start by breaking down some of the known costs to keep track.

There are ways you can cut costs, such as repurposing items you already have. For instance, if you have a computer, this can be a quick and easy way to save money. Also, you might be able to save money on your vehicle costs if you already have something suitable.

The franchisor may provide you with a list of equipment that you need with prices and potential suppliers, but look around to see if you can get some better deals.

And there are always auctions where you can buy equipment second hand for less.

Marketing costs can vary

There are many marketing costs that you will need to consider. There are two areas of marketing that you will need to spend money on and these are online and offline. Offline covers marketing channels like leaflet drops and advertising in local publications. You can get quotes for this from suppliers with ease.

Online costs are harder to predict. You can use many different channels to advertise your new business. You could market, for example, with PPC, social media, email marketing, website ownership and more.

These costs can mount if not managed well. For example, PPC is often expensive if you’re not experienced enough with cost per conversion greater than £10 in some cases.

Final word: What does it cost to start a franchise?

When it comes to the question, ‘what is the cheapest franchise to open in the UK?’, there’s no real answer. The average UK franchise costs around £42,200. This figure includes the franchise fee and all the equipment and stock to get started. There are of course, many low cost franchises under £10,000 and these are typically home or van based.

However, costs can go much higher than this and others will be cheaper. There are ways to lower the costs by re-using some of the equipment you have or buying equipment second hand.

Some franchises might cost less to open but will cost more in the long-term. Costs could spiral because you need to spend more on marketing, or you may require more funding as it grows to cover expansion costs associated with hiring more staff and buying in equipment. And you might need to pay more in monthly revenue to franchisors who offer lower startup fees.

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