A guide to franchise opportunities under £10k
At the last count, there were more than 900 Business Format Franchises in the UK today. Those are established businesses that you or I could invest in right now. Brands that we’re almost guaranteed to make money from if we work hard, and if we promise to follow the franchisor’s proven business model.
These franchises come in all shapes and sizes, and they suit all budgets. There are a few million pound hotel chains and some well-known fast food mega-brands. But there are also lots of low-cost, lower profile and more accessible franchises out there too. The average amount a franchisor charges as an entry fee is £15,000, and lots ask for much more than that. But many people are looking for franchise opportunities under £10k or even under £5k.
That seems a sensible budget to set if you don’t have vast savings or equity to pledge against a bank loan. And with the average redundancy cheque just short of £12,000, it gives people the opportunity to re-invest in themselves and start a business of their own. Furthermore, while nobody wants to forfeit £10,000, a low-investment franchise mitigates your risk as you have less to lose if anything does go awry.
But what can you get for under £10,000?
Of course, it’s unlikely you’ll find any fast-food or retail franchise opportunities for such a small investment. But, if you’re able to keep your overheads low, there are plenty of franchise opportunities under £10k. Most of them will allow you to work from home. Many are mobile or van-based businesses. And while some involve meeting people, others are more solitary.
Flexible franchising to suit all types
You could say that franchise opportunities under £10k are more flexible than those that command a higher investment. They appeal to more people because more people can afford them. But they also appeal to more people because they fit in with our lifestyles.
Quite a few franchise opportunities under £10k can be operated on a part-time basis. Others need more of an investment in time but, crucially, you get to choose those times.
A business you can run anytime and from anywhere
If you’re looking for a business that you can fit in around your lifestyle and any other commitments, then look online. You’ll find lots of internet franchise opportunities under £10k. And you don’t need to be the next Bill Gates to make them work.
If you have a decent grasp of technology and the discipline to work a few hours every day – even if they’re not your traditional nine-to-five – then a web-based franchise could be perfect for you. You can work from the coffee shop, from home or the beach. In fact, all you really need is a laptop, an internet connection and a business model that works.
The shortest commute in the world
Many franchise opportunities under £10k are home based. And many people choose this type of franchise for its convenience as much as its cost. They’re especially attractive to busy parents, or mums returning to work who want to remain near to their children.
Home-based franchises also appeal to white-collar professionals who’ve grown sick of lengthy business trips. While spending all week in luxury hotels and hammering the expense account might sound glamorous, the novelty soon wears off. Getting to work in seconds, and reverting to home life in an instant, has huge benefits to family life. It isn’t without its challenges, but with less time spent on commuter trains or stuck in traffic, there’s more time to be productive and spend time with those that matter.
Time spent away from home, but not far from home
You’ll see lots of low-cost franchise that are home-based, but that doesn’t mean you’ll be home all day. There are a huge number of franchise opportunities under £10k that require a van or a liveried vehicle. You might be delivering food to the workplace, or pet food to the home. You might be driving to clean ovens, fit windows or fix chipped windscreens. But because most franchises have defined areas – or exclusive territories – your day spent travelling won’t be too far from home.
What do you really get for under £10,000?
So who pays for that vehicle? Surely you can’t get a shiny new van and a franchise for less than £10,000? Sadly, you can’t. But you can lease a van as part of your ongoing expenses. Many franchisors will include the livery as part of your franchise package as well – it ensures there is corporate consistency in their branding – but you will be responsible for financing the vehicle.
A low entry fee covers the licence, and it might well include the training and a few items such as clothing and stationery. But it won’t include much more. Because by the time the franchisor has spent their money marketing the opportunity, there really isn’t anything left.
You need to find out exactly what is included in the franchise package. Then factor in working capital requirements such as a vehicle costs, insurances and marketing. And that will give you your total investment. So, while there are plenty of franchise opportunities under £10k, that doesn’t mean that’s all it will cost you.
Why is the franchise fee so low?
Does the old adage ‘you get what pay for’ apply? Are you taking more of a risk with franchise opportunities under £10k? Because while the financial risk might be lower, the true measure is a return on that investment. So find out what you’re getting for your money. If the franchise fee is surprisingly low, then perhaps you need to ask what you’re getting for your investment.
A franchise is a proven business model, and one that should provide support to give your business the best chance of success. If the entry costs are very low, how does the franchisor fund that support? In most cases it will be through Management Services Fees (MSF) taken as a percentage of your sales, or on occasions it will be a fixed monthly fee.
Early adopter benefits
Investing in franchise opportunities under £10k doesn’t mean you’re getting less. In some cases you can get much more. If you’re an early adopter of a new franchise – a pilot franchisee – you can actually steal a march on others.
Most new franchises charge a lower entry fee to attract the first few franchisees. The franchise grows, is successful and becomes more established. And at that point, when their brand has more value, the franchisor puts up their fee.
But that means your business has more value as well. It’s an asset after all.
So, if you’re prepared to take the risk and work with the franchisor while they develop their brand, you could end up with a greater return on your investment.
Franchise opportunities under £10k provide an entry level that’s affordable to most. You won’t need to remortgage, or burden yourself with a business loan. In fact, while it might not be advisable, most people could put £10k on a credit card or two.
But, like any investment, make sure you do your research before handing over any money.
By Alex Waite, Franchise Consultant