10 Franchises You Can Afford
We offer a selection of profitable ventures that are within your reach
success will depend on many factors: the climate of the marketplace, personal aptitude, adequate financing, and the availability of other resources. According to DeBolt, “Becoming a franchisee reduces the risks of operating your own business substantially, but it doesn’t eliminate them.”
Take a personal inventory of your goals and skills. Examine your interests and how you can parlay them into a business. “I believed that children, including my daughter, should have hands-on exposure to science at an early age,” says Cornelia Ryan, owner of a Little Scientists franchise in Richmond, Virginia. The franchise, which offers science enrichment programs for preschool and elementary school students, seemed like the perfect venture. Ryan used her personal savings to purchase her franchise last July for $20,000. Her company officially started operation in October. She expects her franchise to gross $60,000 this year.
Have enough capital. “Yes, the initial start-up money is low,” Jefferson says, “but you should come to the table with additional capital to make it work.” Jefferson’s total investment in his franchise was nearly $70,000. It’s important to make sure you have enough capital to purchase the franchise, as well as funds to cover additional st
art-up costs and at least six months’ worth of operating expenses. Ryan agrees. “If I had used that capital to borrow more money,” she says, “I would have had extra money for marketing and general operating costs. I would have had a cushion.”
As a new business, you may experience uneven cash flows and unforeseen problems that will require additional money. Any one of these surprises could deplete your reserves even though you still have to pay rent, salaries, insurance, and other fixed expenses. To safeguard your enterprise from a financial disaster, secure adequate backup reserves. These could be in the form of savings, bank loans, or support from relatives.
Contact the franchise. Once you’ve narrowed your search, give the franchisor a call. Ask them to send you a complete packet on their organization. If the packet sparks your interest, your next step should be to visit the franchisor’s headquarters. According to DeBolt, that visit will help you gauge whether you are a good fit with the organization. It will also help you build relationships with individuals in the home office.
Read the fine print. Take a close look at the profile of your prospective franchisor and ask yourself these questions: Does the product demonstrate a clear advantage over the competition? Has the standardized system stood the test of time? Does the franchisor provide exceptional franchisee support? Do the management’s objectives seem realistic in the current climate? Does the franchisor have a strong commitment to its franchisees over the long term? The answers to these questions and others could save you time and money.
Call other franchisees. DeBolt suggests calling a minimum of 25 current and/or past franchisees with your chosen franchisor. Discuss their experience and ask them about the pros and cons of becoming a franchisee.
Be prepared to negotiate. Contrary to what the franchisor tells you, a number of variables are