How To Purchase A Franchise On A Budget!

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Zero to low funds? Maybe you think the option of purchasing a franchise cannot be achieved for you. Well, think again!

There are always options if you know who to talk to. While it may seem obvious to say so, nobody should ever make a considered purchase without obtaining a professional opinion; affordability is undoubtedly very important for your own life and just as important in franchising.

What Options Do You Have For A Low-Cost Franchise?

Many franchise options are available that are low cost, with the first fee you might be aware of being the license fee or franchise fee. Some franchises of various investment levels covering many sectors could range from very little to typically up to £30,000. This does not always mean the total investment required, but we will elaborate on this further in the article.

With lost cost franchise fees of up to £25,000, there are options to obtain a government-backed loan of up to twenty-five thousand pounds per applicant!

These are not grants, but relatively low-interest loans, typically payable over the years, and for you mean that, at this investment level, you could be paying a few hundred pounds per month on a £15,000 franchise fee rather than requiring that investment level up front, it is still a loan that needs to be repaid though!

You might be some form of partnership, and if there are just two of you in that, there will be an option to obtain as much as £50,000; this could be useful if you are looking for additional funds to provide working capital, simply search for this fund and you will see plenty of support available to guide you through the process.

Does Low-Cost Mean Low Income?

This would be a great question to ask! And it is a fair point when looking at some franchise options that require additional funds, for example, equipment or, in terms of a brick-and-mortar food franchise, the total investment required will be way more than any advertised franchise fee. As such, additional fees will be needed to cover a fit-out or equipment and stock.

The franchise fee is relatively low just because of the additional investment required. Many of these low franchise fee cost franchises can go on to generate six and seven figures! Go and check them out for yourself. Of course, it does mean that they typically have higher fixed costs than other types of businesses, so additional working capital will constantly be required. It is important not to overlook this point in your forecasting!

More options that do not need additional investment could be a working-from-home franchise, seemingly more popular than ever in 2023 if we ever had anything to thank for covid. Often this initial fee would cover any initial and ongoing training the franchisor provides. Again, the fee often remains low, making it even easier for you to commit.

Once again, as this means your involvement is most probably your time and perhaps expertise, there are no significant costs to any party, but depending on your specialism,  can be very lucrative to the tune of five or six figures per year!

How Do You Choose The Right Franchise?

Focus on a few key elements that will help you. These might include sectors you want to be involved with. Location will be important for most, even investment level; no point in looking at franchises that are advertised and require hundreds of thousands of pounds if you do not have access to that level of liquid capital.

Can I Use My Own Bank For Finance?

Yes, you can! And in days gone by, this would probably be your starting point. However, long gone are the days of your bank manager personally knowing you and approving loans, but there will be online options that look at your credit history to see how credit-worthy you are.

If you can obtain finance this way, you are pre-approved for some or all of the franchise costs. Quite often, these can be unsecured loans too, which might be advantageous to you in some circumstances. You will undoubtedly be advised to seek advice from a specialist lender or broker, too.

These companies have insider knowledge of the breakdown of franchise costs and will advise on what type of finance facility will cover which elements. They can often challenge bank rates, too, as they spread themselves across multiple lenders. Often the very franchise company you are researching will have contacts with people that have relationships with lenders, and brokers will be happy to help you.

There are always options within franchising! Seek professional assistance if you are struggling; you’ll find everyone in the franchise sector very friendly and wanting to help you, and you will be welcomed with open arms! That is one thing I’d happily guarantee you!

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