The Franchise Cost Can And Will Determine The Duration Of Your Time In Business
There are several key factors when looking at the initial franchise cost of any business. Determining your investment will be based on your specific goals with that particular business model. Knowing the amount of marketing costs, initial business setup (materials, equipment, inventory, staff, insurance, etc.), your competition whether local or virtual, and most importantly the ROI (return on investment).
An initial franchise cost can set a new business owner for a fast return on their investment or a possible positive return on investment that can be delayed for years to come.
Unfortunately, the current economic situation that not only this country is struggling through but every other country in the world as well, also has a determining factor in a duration and profit margin of any young franchise. But there are some industries in which their initial franchise cost is still considered to be in the profitable range with an even better ROI than traditional franchise models.
Let’s go over a few.
A Franchise Cost Comparison Of Several Popular Industry Models
The following is a short break-down of just a few business models ranging from highest franchise cost to the lowest. The first is:
- Fast Food Franchises – While most individuals as diving into fast food purchases more often that the typical restaurant, the thought of investing into a McDonald’s, Burger King, and maybe even a Dunkin Donuts franchise can seem as a lucrative franchise to invest in. But consider this, the typical fast food chain restaurant will cost on average between $80,000 to $100,000 initially. While still in the budget of a franchise cost for most small business owners, the chances of finding available capitol and investors willing to invest their funds in a down economy are extremely difficult.
- Typical Restaurant – Whilst still remaining in the average franchise cost of $80,000 to $100,000 to begin, the difficulties increasing maintaining a profitable business. Long business hours, fast paced environment, tons of staff members, not to mention the high cost of operations to maintain a restaurant in proper order with health code regulations, the franchise cost continues to increase. Not to mention that seeing a positive ROI averages between 7-10 years, while research as been done showing that the average business only remains open for 3-5 years. Something to truly consider!
- Department Stores – Even though the average person will always make the time to visit a department store considering having a tough personal financial situation, the cost of maintaining a department store’s inventory alone can be a bit overwhelming. Not to mention that the start up franchise cost can reach the $1M mark. Ouch! Staff costs, utility costs, and business expenses can reach undetermined heights in which even the greatest of department stores have been unable to maintain. Circuit City stores are a great example. As a kid, I remember visiting numerous Circuit City stores to only recently learn of their filing of bankruptcy. Yet another to see the hardships of this economy is Ashley Furniture Stores. All but a few are left and not too long from now, there won’t be any left. Truly sad considering I purchase ALL of my furniture from Ashley’s.
- Virtual Business – As tough as it may sound to some small business owners, the virtual world is among us. From browsing the web on your PC or MAC, to browsing online using your smart phone, most new customers are being made via the use of the all-powerful internet. Taking into consideration an extremely low franchise cost (averaging between $2,000 to $20,000 depending on the type of top-tier business), the unlimited reach in attracting customers and building a loyal following to your franchise brand is extremely powerful. On average, the most profitable virtual business models carry NO inventory, NO overhead expenses, NO large franchise cost, NO rent, NO insurance, and above all, the ability to set your business hours as you please. And even in today’s economic crisis, the virtual industry has had very little from our financial crisis considering the franchise cost while the typical franchise struggles literally daily to maintain their doors open. Talk about stressful when you as a franchise owner has the responsibility of the financial downfall of those under you!
The Franchise Cost Is Not All That It’s Cracked Up To Be
Just as you read above, there are several facts to consider into a franchise cost that can be extremely important and very dangerous if not thought through and researched properly. But is that all there is to owning a franchise?
Obviously not! The most important cost factor to consider is the actual physical time you will be devoting to building that particular franchise.
As an entrepreneur, you most likely already realize the amount of dedication you’ll need to create a successful business. But knowing and actually implementing that devotion, 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, placed this as my largest center of focus and could not fathom having to remain away from my growing family for that long period of time. I placed my investment into the virtual online business model and I suggest you do the same.
For a view and more information on the low franchise cost business model that has built hundreds of successful business owners throughout the world, visit the link below.