In today’s economic climate, many corporate layoffs have left workers wondering, “What’s the next step after my job loss?” Starting a franchise business is a viable option for those who prefer not to take a leap of faith and are looking for an already proven system with minimal risk. While a franchising opportunity can be quite expensive, there are several options for those with a budget of $20,000 or less. If you’re considering a franchise business within this range, there are several questions you should ask yourself before investing. Here are the five most frequently asked questions to explore when researching franchises under 20K.
1. How Much Start-up Money Is Required?
When researching franchises under the 20K price range, one of the most important factors to consider is how much money is required upfront. While some franchises may require an initial franchise fee, others may require that you pay the entire franchise cost before ever opening your doors for business. Do your research to ensure that you are not paying from your own pocket to get the business up and running.
2. What Are the On-Going Fees?
In addition to the upfront fees and other franchise costs, it is important to consider the on-going fees associated with franchising. Depending on the franchise you choose, these fees may be a combination of royalties, advertising fees, and other administrative costs. Be sure to ask the franchisor to provide a breakdown of all expected fees so that you can make sure that you will be able to cover these costs with the money set aside for the franchise.
3. What Types of Franchises Are Available?
When considering a franchise under the 20K range, it is essential to take a look at the types of franchising available. Franchisors provide a wide variety of franchise models so it is important to review those that are within budget and match your goals and preferences. Do research on the types of franchise that are offered under the 20K price range and compare them to determine what may best fit your business goals.
4. What Form of Ownership Should I Choose?
When selecting a franchise business, you will also need to decide what type of ownership arrangement is best for your needs. Depending on the franchise, there may be various types of ownership available, such as single proprietorship, limited liability company (LLC), general partnership, or corporation. Understanding what type of ownership is best suited to your needs is especially important for franchises under 20K in order to maximize the potential return on investment.
5. Are There Any Other Costs Involved?
Finally, be sure to consider the other costs associated with franchising. While the initial franchise fee and royalties are often the main focus of attention, other costs such as expenses for training, marketing, and equipment should also be considered when selecting a franchise business. Be sure to factor these additional costs into your budget and review the details with the franchisor prior to investing.
In closing, starting a franchise business is an excellent option for those who are looking for a proven business model to invest in. While there are several franchise opportunities at the $20K mark, it is important to be mindful of the associated fees and to ask all necessary questions to ensure that the investment is sound. With the help of International Franchise Professionals Group (IFPG) franchisor members and franchise broker group members, aspiring business owners can be guided through the process of selecting the right franchise business for their needs and goals.
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