Those looking to build a business may be attracted to the benefits of a franchise. In addition to offering the support and promotion of the franchise home office itself, these types of start-ups can purchased with startup fees in the realm of ordinary people. Before you officially throw your hat into the entrepreneur ring, consider these affordable franchise options from Entrepreneur's Franchise 500 list for 2010. Remember, the total investment estimates for these franchises are the low end of the scale and may be higher depending on a variety of factors. (For a background reading, see Is Buying A Franchise Wise?)
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1. HR Block
This big name in tax preparation has seen consistent growth in the number of operations worldwide. The franchise is unique in its higher 30% royalty fee, but it requires no up-front franchise fee and a modest total investment starting as low as about $35,000. Some in-house financing for equipment, inventory and payroll is also available.
Named the number one overall franchise in 2010 by Entrepreneur.com, this popular brand is moving into locations across the country. A favorite among small towns that may not have any other franchises to compete with, Subway has an aggressive marketing model (remember those $5 foot-long commercials?) and a budget-friendly menu. With initial costs as low as about $84,000, and no need to stock up on the heavy grills and fryers of more traditional eateries, this small-space franchise can operate almost anywhere zoning will allow.
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A popular name in getting fit and having fun, Jazzercise has been around since 1969 and boasts over 5,000 trained instructors. Unlike other fitness-related brands, Jazzercise offers its franchisees the possibility of running their business from home, and the $0 net worth and liquidity requirements make it a viable option for those who are new to the world of small business. With a franchise fee of just $500 to $1,000 (total investment starts as low as roughly $3,000), this is one company that offers a lower risk opportunity for an unstable economy.
4. Comfort Keepers
This non-medical in-home care company is considerably more expensive than some others on our list, but can still be purchased and set up for as low as about $60,000. The majority of the expense is its $38,500 franchise fee, and a Comfort Keepers franchise requires a prospective franchisee to have $200,000 in net worth and $57,000 in liquid assets. While at the high end of our value-priced list, its prospect for earning is high. With baby boomers nearing the age of needing some extra help with cooking, cleaning and daily non-medical care, the opportunity may be well worth the initial cost. (For more, see 7 Boomer Jobs That Are Up For Grabs.)
5. ServiceMaster Clean
Branching out from the traditional service offerings of residential and commercial housekeeping, ServiceMaster Clean has found a niche opportunity in disaster cleanup and restoration, along with retail and commercial cleaning services. Franchises can be started with a total investment of as low as about $48,000, in some instances, and only three employees are required per location. Additionally, the business can be done out of the home, and financing is available for almost every facet of the businesses - making this an attractive opportunity for those with only modest liquidity.
This well-known convenience chain is still looking for franchisees in select states across the U.S. With a $0 cash liquidity requirement and financing for franchise fees available, it's possible to get into the business on a limited investment budget. New owners should note, however, that startup costs can vary widely – total investment costs be as low as $30,800 but can reach upwards of over $600,000. Royalties also vary, making it difficult to put a price tag on this franchise with some additional analysis. Requiring between seven and 10 employees per location to operate, operating expenses can add up for this low-fee opportunity.
The Bottom Line
There's more to choosing a franchise opportunity than just the startup costs. Initial investment price, however, is one of the most looked-at factors for investors - especially those first-time business owners. Considering a value-priced franchise leaves more money for improvements over time and could help owners get through a rough patch, provided the recession is here for a while. (For more, check out Share The Wealth With Franchises.)
For the latest financial news, see Water Cooler Finance: Rising Markets And Buffett's Successor.