The cost of the franchise can and will determine the length of your time in business
There are several key factors when looking at the start-up cost of franchising any business. The determination of your investment will be based on your specific goals with that particular business model. Know the amount of marketing costs, the initial configuration of the business (materials, equipment, inventory, personnel, insurance, etc.), your competition, whether local or virtual, and most importantly, the ROI (return on investment ).
An initial franchise cost can see a new business owner earn a quick return on their investment or a potential positive return on investment that can be delayed for years to come.
Unfortunately, the current economic situation that not only this country is going through, but also all other countries in the world, also has a determining factor in the duration and profit margin of any young franchise. But there are some industries where the initial cost of franchising is still considered profitable with an even better ROI than traditional franchise models.
Let’s review some.
A Franchise Cost Comparison of Several Popular Industry Models
The following is a brief breakdown of a few business models ranging from the highest deductible cost to the lowest. The first is:
- fast food franchises – While most people dive into fast food shopping more often than the typical restaurant, the idea of investing in a McDonald’s, Burger King, and even Dunkin Donuts franchise can seem like a lucrative franchise to invest in . But consider this, the typical fast food chain restaurant will cost on average between $80,000 and $100,000 initially. While it’s still in the budget of a deductible cost For most small business owners, the chances of finding available capital and investors willing to invest their funds in a down economy are extremely difficult.
- Typical restaurant – As long as you stay average deductible cost from $80,000 to $100,000 to start, increasing the difficulties of maintaining a profitable business. Long work hours, fast paced environment, tons of staff members, not to mention the high cost of operations to keep a restaurant in order with health code regulations, the deductible cost continue to increase Not to mention seeing a positive ROI averages 7-10 years, while research has been done showing the average business only stays open for 3-5 years. Something to truly consider!
- Department store – Although the average person always takes the time to visit a department store considering having a difficult personal financial situation, the cost of maintaining a department store’s inventory can be a bit overwhelming. Not to mention that the initial cost of the franchise can reach the $1 million mark. Oh! Staff costs, utility costs, and business expenses can reach undetermined heights where even the largest department stores have been unable to sustain. Circuit City stores are a great example. As a child, I remember visiting numerous Circuit City stores to learn of their recent bankruptcy filing. Another that sees the difficulties of this economy is Ashley Furniture Stores. All but a few remain, and soon there will be none. Really sad considering I bought ALL my furniture from Ashley’s.
- Virtual Business – As difficult as it may seem for some small business owners, the virtual world is upon us. From browsing the web on your PC or MAC, to surfing online using your smartphone, most new customers are gained through the use of the almighty internet. Considering an extremely low franchise fee (averaging between $2,000 and $20,000 depending on the type of top-tier business), the unlimited reach to attract customers and build a loyal following for your franchise brand is extremely powerful. On average, the most profitable virtual business models have NO inventory, overhead, large franchise costs, rent, insurance, and most of all, the ability to set your business hours however you want. And even in the current economic crisis, the virtual industry has had very little of our financial crisis considering the cost of franchising, while the typical franchise struggles literally on a daily basis to keep its doors open. Speaking of stress when you as a franchise owner bear responsibility for the financial downfall of those below you!
The cost of the franchise is not as good as it seems
As you read earlier, there are several facts to consider in the cost of a franchise that can be extremely important and very dangerous if not properly analyzed and investigated. But is that all there is to having a franchise?
Obviously not! The most important cost factor to consider is the actual physical time you will spend building that particular franchise.
As an entrepreneur, you most likely already realize the amount of dedication it will take to build a successful business. But knowing and putting that devotion into practice, 16 hours a day, sometimes 7 days a week, can be a bit overwhelming both physically and mentally.
Above all, this is exactly why I personally, as an entrepreneur, put this as my biggest focus and couldn’t imagine having to stay away from my growing family for such a long period of time. I have placed my investment in the online virtual business model and I suggest you do the same.
For a view and more information on the low cost franchise business model that has created hundreds of successful business owners around the world, please visit the link below.
