Sure, there might be some great franchises out there. And there might be some low-cost franchises. But everyone knows if you want to make real money you need to invest a lot. Right? Wrong. There is no direct relationship between the amount you invest in a franchise and the amount you can expect to earn. That’s right. Though it comes as a surprise to most people, the amount you might earn with a franchise has nothing to do with how much you need to invest. There really are some great low-cost franchises. There are a few reasons for this. The biggest reason is the amount of the investment is largely a function of the kind of industry you are in. It’s been widely reported a McDonald's costs over a million dollars to open. If you think about it for a minute, that makes sense. To open a McDonald's, the owner usually builds a building. You’re already out of the “low investment” arena, but you aren’t done. You’d still need to pave a parking lot, put in a drive-through lane, and put up that big golden arches sign. All of that is expensive, sure. But we haven’t even talked about the inside of the building – tables, chairs, cash registers, freezers, grills, and on and on. It’s all those asset costs that drive the investment. That’s what makes restaurants one of the most expensive categories of franchises. You can say the same thing about any type of retail operation. You usually have to rent expensive space. You have to build out the space – carpet and shelves and lighting and signs – it all adds up. But now consider the other end of the spectrum – the low-cost franchises. What about businesses that don’t require expensive real estate? What about businesses that don’t need parking lots and inventory and signs? There are plenty of franchises that are service businesses. The owner works out of their home, or maybe out of a small, inexpensive office. Without the need to build and equip a large restaurant or retail space, the investment is much, much lower. How much? Many top opportunities have a total, all-in investment of under $150,000. Sometimes much under. Senior care is a great example. This is a business, just based on demographics, is projected to grow steadily far into the future. It is a rewarding, recession resistant business. It has a very high income potential. Many franchisees earn a net income of $300,000 or more! The opportunity is high, but the investment is low. What are some other low-cost franchises? There are tutoring businesses and coaching businesses and painting businesses and direct mail business, and many others – all of which have investments not much more than $100,000. And many, many of these franchisees earn large, six figure incomes. If you’re interested in exploring franchises focus on finding a business that you like. Don’t worry about how you’ll raise a million dollars. Chances are, you won’t need that much.
July 08, 2013