Myths and truths of owning a low-cost franchise – Franchises under 30k 

Franchises under 30k – The number one point

The most important point that often is not spoken to would-be franchisees of some of these low-cost franchises, which are generally under $100,000, is there’s not enough profit margin available to hire a day-to-day manager. So as a franchisee of a low-cost franchise, it could be in the service sector. You can expect to work full-time for the first 12 to 18 months. That’s something that many would-be franchisees don’t expect. And so, if you are not prepared to work full-time for 12 to 18 months, then franchises under 30k might not be the best fit for you.

Franchises under 30k – Item number two

It takes a long time to build up that initial customer base and pass break-even. Where some franchises, especially in the Food sector, might break even after three or six months, for some of the service brands, it can take up to 12 months or more. Especially for service concepts like staffing, it can take 18 months to break even. It’s really important to talk to current franchisees of any franchise model that you’re thinking about investing in to see how long it took them to break even, as well as until what time was there enough profit margin to potentially have a day-to-day manager in place.

Franchises under 30k – Point number three

I mentioned working full-time. Full-time has different definitions depending on who you are. Many of the service concepts that we’ve looked at in the $40,000, $50,000, $60,000 range require or strongly suggest that most of the franchisees that are doing this work 50 to 60 hours a week for the first year. So this essentially requires a full-time commitment to the business without earning any money. So make sure that you’re comfortable with that. And perhaps you have a spouse that has a job or another business with steady income coming in for about 6 to 12 to 18 months because for that period of time you can expect to make no money at all. Or very little money in many of these service-based, low-franchise-cost businesses.

Franchises under 30k – The final point

Keep in mind that the failure rate is pretty high for many of these low-cost franchises. Our analyst looked at over 2,000 different franchise brands, and how they performed with the 7(a) program under the SBA program. Our analyst at Vetted Biz looked at over 2,000 franchise brands. Many of these franchises were low-cost opportunities under $100,000 that tended to have high default rates, depending on the specific industry, as well as the specific franchise opportunity.

Some of the reasons that might contribute to this high failure rate are that it’s a low entry amount, so it’s easy to get in, there’s a lot more interest, and perhaps there’s even heavier competition in those different industries. Also, some of the systems have less commitment from the franchisor. You’re not working with the franchisor on selecting the real estate and building out the store. There’s not extensive training on-site oftentimes. So there’s less commitment on the side of the franchisor – as well as on the side of the franchisee in terms of signing a commercial lease for 5 years or 10 years. And having that personal guarantee.

Many of the service-based concepts can be operated from your home, a shared office, and month-to-month rent office space, as many of the services are conducted outside of your business premise.

Franchises under 30k – In summary

Low-cost franchises often don’t have enough profit margin for a manager. Also, the franchisee for the first year is generally working many hours; it could be 50 to 60 hours plus. It can take a long time to build your customer base and then break even. Also, many of the brands in the low-cost category (sub-$100,000 franchise investment) have pretty high franchise failure rates. So we strongly recommend that you look at franchises under 30k and consider the pros and cons before taking the plunge.

It is important to do your research and to speak with existing franchisees of any potential franchises that you’re interested in. Make sure that you have a good understanding of how long it will take for franchises under 30k to break even, what kind of commitment to time and money is required, and what kind of success rate these franchises have had. This way, you can make an informed decision whether or not franchises under 30k are right for you.

Examples of Franchises under 30k

Are you looking to invest in franchises that require limited funds? Vetted Biz offers a selection of franchises under 30k on its website. Here are some franchises that may be of interest:

Abbey Carpet & Floor

Abbey Carpet & Floor has been in the business for over three decades, providing franchises with expertise and assistance in the floor covering and window treatment industry. Through their tried and true model and strong purchasing power, franchisees gain access to a wide range of services including carpets, hardwood, laminate, tiles, vinyls, blinds, shades, and shutters. Franchisees are supported by an experienced team of professionals who are well-versed in franchising. Benefits of being part of Abbey Carpet & Floor include: training from seasoned specialists; reliable company strategy; nationwide buying clout; plus access to an array of choices for customers.

American Poolplayers Association

The American Poolplayers Association (APA) is the biggest pool league in the world, with more than 250,000 members and 8,000+ establishments in the US, Canada and Japan. The APA is deemed to be the preeminent amateur pool organization in North America. To-date, it has dispensed over $1 billion in prize money, making it the most generous cash prize entity globally. The APA also provides chances for players of different aptitude levels to go up against each other through a structured divisional system. The franchise being offered is intended for managing an amateur pool league.

AmSpirit Business Connections

AmSpirit Business Connections is a services firm that provides business professionals with the resources they need to network, educate themselves, and promote their businesses. Membership of AmSpirit grants access to a wide range of tools that can help take any business to the next level. Its team is composed of seasoned individuals who are dedicated to helping its members reach their goals. They are well-aware of all the resources available through AmSpirit and will always strive to provide clients with the most appropriate solutions for their professional development needs. Additionally, AmSpirit also offers event planning and marketing support services. By joining AmSpirit, entrepreneurs have a clear path towards success.

ApTask

Aptask is an international provider of staffing and hiring solutions. They collaborate with businesses of all sizes, across multiple industries, to identify the ideal candidate for their requirements. They recognize that each business has its own distinct needs, which is why they offer a variety of services to help them locate the best possible match. Their range of services encompasses short-term, contractual, or long-term placements, as well as sourcing and evaluating potential hires and onboarding new employees.

Assist-2-Sell

Assist-2-Sell is a pioneering real estate business that offers home buyers and sellers an unparalleled, comprehensive service that other firms cannot match. With offices distributed all over the U.S., their team of seasoned real estate agents are passionate about aiding individuals with purchasing or selling their homes. They offer a broad range of services such as house staging and advertising.

Benjamin Franklin Plumbing

The Benjamin Franklin Plumbing franchise provides a broad array of residential and light commercial plumbing services, extending from maintenance and repair to remodels and replacements. In addition, they provide water conditioning upkeep, drain and septic tank digging, cleaning, re-piping, as well as drain cleaning assistance – excluding industrial or any new construction processes. With all-encompassing offerings like taps & faucets to toilets and showers, not forgetting gas piping plus fixture services too – they even boast grease trap and interceptor solutions. All additional service requirements are met with appliance fixing or replacing expertise along with small electrical needs and HVAC demands. Furthermore this franchise offers 24/7 emergency support – guaranteeing those in need get the help required whenever the need arises.

Best Brains

As a franchisee, you will be responsible for running an educational center under the BEST BRAINS brand name.

Box Drop

Box Drop is searching for entrepreneurs to expand its franchise network. As a franchisee, you would take on the responsibility of delivering the company’s services in your region. This entails finding clients, arranging bookings, and giving customer support. Franchisees at Box Drop should be ready to put in tremendous effort into developing their businesses and providing remarkable customer service. Under this franchise agreement, you will market furniture, mattresses, appliances and other household items at reduced prices to the public.

Brickhouse Cardio Club

This opportunity encompasses a gym functioning under the moniker of BRICKHOUSE CARDIO CLUB®.

Canteen

The franchisee will be authorized to provide food, drink and other consumer goods using one or more of the following options, as established by Canteen: vending machines, meals, combined services, office-brewed coffee and/or protected delivery systems.