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Three Cautions on Buying a Low Cost Franchise Opportunity

By lexutor Mar1,2023

Three Cautions on Buying a Low Cost Franchise Opportunity

Have you considered buying a low cost franchise opportunity? Is the thought of owning a business and working for yourself appealing to you? The high price franchises like McDonalds and Starbucks cost a fortune to buy. Since getting high cost loans are hard these days the low cost franchises are in. People are looking at buying franchises (whether high or low cost) as a way out of the normal 9-5 rat race. If you search the internet you will find thousands upon thousands of different avenues that you can take to start a franchise.

It can be difficult looking for a website that will give you unbias information about the industry without them selling you on their particular franchise opportunity. Now although low cost franchising is very appealing and looks like it is a bunch of glits and glamour, there are some challenges that tend to be a big headache for owners. The end result is them closing down their business.

Long hours

One of my favorite franchises that I go to is Subway. Around my way I see the owner or his family always there working. I used to wonder why but now I understand. Of course when you are starting a business you expect to put in long hours. But what about when 2, 5, then 10 years goes by. Slaving for 60-80 hours a week is no way appealing but yet that is what the masses do that operate franchises.

You can stay in corporate America for that. At least you don’t have to deal with certain headaches that owners deal with. Do not think it will be a cake walk and you’ll be playing golf everyday. Things just don’t happen like that.

Under Paid

Making that golden $100k+ a year is a dream come true for most franchise owners. But that usually doesn’t happen till your 4th-5th year. The sad thing about this is that most brick and mortar businesses close down with in the 1st five years.

Unlike having a job, when you own a franchise you have to pay your vendors first. Then you have a lease to pay, traditional phone and lighting bill. Up next comes your employees. Typically in a franchise the owner gets paid last. Believe that the amount will fluctuate each and every month.

No advertising buffer

I’ve heard it too many times from Subway owners, to Tax franchisors, to others that you will get promised the whole earth when you are looking to buy. As soon as you sign the contract and the franchise is yours you may be lucky if corporate steps in and helps you.

Advertising is the life blood of any business. If no one knows you are out there you will not make any money. You can’t depend on corporate to pay for your advertising or even give you a big budget to work with. Prepare to make things happen on your own.

These are only a scratch on the surface. This is not meant to discourage anyone from looking to get involved in a franchise opportunity. Use it as a caution. With any business start up you have to be weary and wise about what you get into. Not only that but expect to deal with certain challenges.

By lexutor

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