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Have you hit the limit when it comes to expansion for your current franchise brand? There are only so many franchises that one territory can contain. Once a market hits saturation, you may think your only choice is to engage in fiercer competition or enter a new, unfamiliar market. But there is another option. All you must do is think strategically — and that means looking outside of your existing brands to keep your portfolio growing.

Bringing a new franchise to your mix, both brands benefit from the ability to share resources, marketing opportunities, foot traffic, and more. The potential to bend the economics of scale in your favor is great. But first, you will need to know how to find a new brand that offers synergies with your existing franchise.

The key is to study the specific characteristics of a franchise opportunity to determine which will be the right fit for your existing franchise portfolio.

1. A Synergistic Brand

2. Easy To Run

3. Brand Recognition

A Synergistic Brand

It is understandable if your first thought when considering adding a new franchise brand to your portfolio was to investigate a similar product or industry. But not so fast. Doing this could be counterproductive. After all, how does it help you to add a competing brand to your portfolio? The reality is you may not even have this option as many franchise agreements don't allow franchisees to open a similar concept. The better route to take is to find a franchise that can work with your existing brand and create synergies to benefit both.

For example, if you're an owner of several ice cream franchises and are looking to diversify your portfolio with a new brand, investing in another ice cream franchise may not be wise. So instead, think about opening a coffee shop franchise, for example. This could be an excellent opportunity to create synergy because ice cream is a summer treat, and coffee is year-round. This pairing is well-balanced and offers the potential to create a harmonious business relationship.

When it comes down to choosing a new franchise concept to pair with your existing franchise business, it is always a bright idea to pick a franchise that is different enough that you aren't poaching business from your existing franchise brand.

Easy To Run

Not all franchise businesses are easy to follow. You don't want a complicated system that will create problems when diversifying your portfolio. The goal is to have your new franchise brand run smoothly and simply alongside your other franchises. That's why, when searching, you want to focus on a franchise brand with simple operations.

Begin your effort by looking for a brand that has a simple model. Does the franchise have a lot of moving parts? If so, that might not be the best choice for you. The more moving parts, the more you will have to add to your plate on top of your existing franchise operation.

Some franchise brands still provide generous sales volumes while being relatively easy to operate with low costs and low occupancy. A franchise that can work efficiently, with easy-to-use systems in place, will allow you the opportunity to reduce overhead costs like labor and energy. That savings can then be turned to other resources, helping you focus on different business aspects instead of constantly being tied up in operations. You want your franchise to run successfully without you having to be there day in and day out. That is the true mark of a franchise with simple operations to add as a secondary brand to your franchise portfolio.

Brand Recognition

Finally, when considering a new franchise brand to grow your business, you must look for a brand with an established presence and awareness. If a brand comes with widespread appeal among the general population, it's much more likely to generate media attention.

For instance, industry recognition for a franchise brand — like being named to national rankings lists or receiving awards — ensures legitimate franchise opportunities. Plus, receiving this type of recognition indicates that the brand has growth potential, attracting even more positive press. That, in turn, will help drive traffic and profits to your location with less effort and resources on your part.

There is no doubt that marketing and advertising will consume a significant portion of your annual budget, particularly when it comes to a new franchise location. But when the brand already has widespread awareness thanks to the franchisor's efforts, the amount you must spend on marketing will be reduced. A brand's ability to land significant press coverage demonstrates to potential investors that the opportunity is a good bet as an investment.

Why Now is the Right Time to Expand Your Portfolio

Despite all the ups and downs in recent years, the franchise industry thrives. There may not be a better time than now to consider diversifying your portfolio with a new franchise concept. Consumer spending is expected to increase as the world emerges from the pandemic. The future for franchising looks remarkable.

It has been projected that 26,000-plus franchise locations opened in 2021, adding nearly 800,000 new jobs and contributing $477 billion to the U.S. gross domestic product (GDP), according to the International Franchise Association (IFA). Now is a great time to get in with a new brand.

Even with this positive news, it is still vital that you be strategic when diversifying your portfolio with a new franchise brand. Look for a brand that won't compete with your existing franchises in a niche market that has room to grow. The new brand should also have simple operations. It is helpful if its culture melds well with your existing franchises. By studying these five components of a franchise brand, you will find you are better equipped to bring a new brand on board that will diversify your portfolio and allows all your franchises to flourish.

After meeting and working with Seth and the Frannexus team to vet and select a franchise concept, I'm so grateful that they were our guide throughout the journey. -Jennifer Robinson, Franchise Owner 

Let Frannexus Be Your Guide!

If you are considering investing in a franchise, don’t take the chance of choosing the wrong one and not achieving your goals. Learn from the experience of others in the franchise field, like a franchise coach, to have the greatest likelihood not just of succeeding but exceeding what you think is possible. At Frannexus, we have the expertise, knowledge, and experience to help you achieve your financial and personal goals. The right match is waiting for you, and Frannexus is the matchmaker to find your franchise soulmate.

Read more. Why Should I Work with a Franchise Consultant?

Find out if franchise business ownership is for you.

Start the survey.

Have you dreamed of being your own boss, running your own business, and achieving long-term financial stability? Then you may have considered the possibility of owning a franchise, but maybe you never really investigated it because you assumed franchises were too expensive for your budget. Indeed, many of the most well-known franchises, particularly fast-food ones such as McDonald’s or Subway, may be out of reach for many thanks to price tags that can reach into the millions, but that doesn’t mean there aren’t other options that are more in line with your budget.

The reality is there are more franchise opportunities than ever, and thanks to new technologies and inventive franchise concepts, many of these businesses are pretty affordable.

Low-cost franchises are available in multiple industries, from vending and photography to staffing and travel. Some may require less than $20,000 in ready cash to get up and running; others may fall between $20,000 to $100,000. The reality is you have options. You may even be surprised at the variety of opportunities that fit a smaller budget.

This Franchise Buyers’ Guide is meant to help you discover what affordable franchise opportunities are out there for you. It will help you learn of the benefits of a less expensive franchise, as well as potential challenges and issues to consider as you search for the best franchise for you. No matter how big or small a franchise you are considering, it is vital that you do all the necessary research before making an informed decision.

That means reading all the company documents you are given. Share these materials with your lawyers, accountants, and trusted family and friends to get their insights. And always reach out to other franchisees. Doing the proper due diligence can help to ensure that your low-cost franchise provides you with significant returns.

Seth introduced us to our target company as pre-qualified applicants! -Alex Liu, Franchise Owner 

Lower costs don’t limit your choices.

For too long, too many people have operated under the assumption that the more money they spend on a franchise, the more money it will make them. Certainly, large franchise operations earn a lot, but they also carry significant overhead. So, the top-line revenue may be impressive for a large, well-known brand name franchise, but the bottom-line profits may be less so.  

What’s more important to consider then? Value. Think about how much weight you place on a smaller financial outlay for a low-cost franchise — from the lowered risk to the reduced demands on your time, energy, and family life. And don’t forget, a more economical franchise offers lower overhead, meaning much more of the money you make translates directly to profit.


Vending

One of the more affordable and convenient franchise options is vending machines. Today just about anything you want can be dispensed from a vending machine, from the traditional beverages and snacks to personal hygiene items and DVDs. Vending machines in the U.S. were estimated to earn $36.5 billion in 2020. Not only are vending machines profitable, but purchasing one is quite affordable, with some priced under $20,000.  

Vending machines can be a great way to start as a franchisee. But it would help if you remember certain things. For instance, location is essential for any business. It is simply crucial for vending machines. If your machine is not placed well, you will not achieve the revenue you want or need. Also, to be successful with a vending machine requires staying on top of reloading stock and what consumers want. 

Successful vending entrepreneurs continually monitor sales, test new products, and stay on the lookout for recent profitable locations. While it might be tempting to consider a vending franchise as one that you can “set it and forget it,” the growth-minded franchisee is always alert and attentive to their customers and their machines. 

Kiosks and Carts

Ever passed by a kiosk in a mall or airport concourse and wondered about the people running it? They are most likely entrepreneurs like you, but with a particular personality. It takes stamina and an out-going personality to turn this low-cost franchise concept into a thriving reflection of your entrepreneurial drive. You must be willing to put on a bit of a show — from making eye contact with passersby to engaging them in conversation to attract them into buying. Of course, smiling and maybe even offering up a little sample of the merchandise or inviting them to examine your products doesn’t hurt either.

Whether you opt for a cart or a kiosk — kiosks are larger, enclosed, and give you a place to sit — both concepts need a great location. Whether you sell popcorn, snacks, sandwiches, sunglasses, gifts, or something else, you must be where the customers are. Kiosks and carts are typically found in high-traffic areas, but should the need arise, the great thing about this type of franchise is its mobility. If you need to move to follow the crowds, pack up your cart and find them. 

Home-Based

We’ve all spent more time in our homes of late, but the great thing about that is more and more people realize that their home can also be their place of work. And that is where a home-based franchise fits in nicely. There are a lot of home-based opportunities available — tutoring, business consulting, cleaning services, pet care, repair services, in-home senior care, internet-focused and more. It won’t be hard to find a business that fits your skillset and background. 

One challenge that does come with a home-based franchise is discipline. Because you don’t have a commute and won’t have set hours when the doors will have to be open for customers, you will have to create a routine and stick to it. While it can be tempting to sleep late, lounge in front of the TV, and take days off, if you opt for a home-based franchise, you must learn to manage your time and stay focused if you are to be successful. 

However, not all home-based businesses keep you indoors all day. Sure, you may not have an office or retail space to visit, but if your franchise is lawn maintenance or car detailing franchise, for instance, you may still need to reach out to service customers and prospects for the business.

Learn the many benefits of a low-cost franchise.

Those with less money to invest are perhaps the most apparent entrepreneurs to benefit from a low-cost franchise. But they aren’t the only investors who can or should seize on what an affordable franchise can offer.

For instance, anyone lacking in business experience will find that an inexpensive franchise provides them with an excellent opportunity to learn the ins and outs of the business world. Another group that may find this type of franchise the ideal way to dip their toe into business is the risk-averse. Finally, because low-cost franchises require a reduced financial commitment, they appeal to a much broader group of people — young adults, minorities, single parents, retired people — anyone with the entrepreneurial spirit but who lacks access to many of the resources more established businesspeople can access.

Even though the financial cost with an affordable franchise is less, the benefits of owning a franchise remain significant. Unlike starting a business on your own, buying into a franchise system provides you with valuable support, from training to marketing to providing necessary supplies — all of which significantly reduce your responsibilities as a franchisee while improving your odds of success.

Even with these multiple benefits, success for any franchisee is never guaranteed. However, because a low-cost franchise comes with lower risks and overhead, it is not uncommon for a franchise to experience profits faster than they might with a more expensive franchise. A larger, more expensive franchise operation may encounter challenges, such as cash flow issues or the need for substantial operating capital, which are not issues for a more affordable franchise option.

Finally, because an affordable franchise comes with fewer moving parts, it can be easier to manage, making it attractive for entrepreneurs who don’t want to sacrifice work/life balance.

But that doesn’t mean that this franchise investment is without risks.

An affordable franchise offers a reduced potential for return. Yes, the margins may be as good or better than another more extensive and more costly franchise, but those margins are coming from a much smaller till thanks to less traffic and less potential to generate revenue.

There can also be an issue with brand awareness. A larger, more well-known franchise benefits from connecting to a distinguished brand name. A small franchise, in many cases, is relatively unknown. Not having a retail storefront may also hinder you in building brand awareness in your community. This all translates to additional work you will have to do to gain a reputation and earn customer loyalty. 

Another drawback of a low-cost franchise is the competition. Because they are accessible to more people, more people are interested. That is why it’s essential to thoroughly examine your business’s intended market when investigating potential franchises. Is it already being served by a similar business? Is there growth potential? Researching the company behind the franchise, but so is understanding the competitive landscape you face.

Finally, remember some advantages to high-cost franchises despite the additional demands they place on owners. An important one is buying power. More extensive franchises can purchase supplies, products, and materials at more favorable prices thanks to their scale. If your affordable franchise is directly competing with a more prominent franchise, it may be harder to compete on price. 

As mentioned earlier, self-motivation is essential with a low-cost franchise. With no storefront, no publicized hours of operation, and no staff of employees depending on your presence and engagement, you must stay focused to succeed. 

How to pick the right budget-friendly franchise for you?

It makes sense to consider a franchise based on your interest. After all, you want to be enthusiastic about your business, and enjoying what you do is likely to keep you dedicated and devoted. However, some people mistake focusing only on what they are passionate about. When emotion overrides reason, you could end up investing in a franchise concept that isn’t the best choice for your long-term success. You may love golf but being tied to a mall kiosk all day that sells golf equipment doesn’t feed that love of the game, and it is very likely to lead to failure.

Research Performance

Give your dream of owning your own business its best shot at success by researching the growth rate of your business. Review its history, whether it’s a few years or decades. Be sure you have a clear understanding of how the franchise has performed. If an idea is untested and unproven, you may not want to take that risk.

Due Diligence

The more due diligence you do, the greater your odds for success. Pay particular attention to item 21 detailing the franchise’s financials in the Franchise Disclosure Document. A solid and healthy company will generally derive a greater percentage of its income from royalties instead of franchise fees. Item 20 is also revealing. Pay attention to the number of units opened in the past three years, how many have closed and if those were taken over by corporate. Be detailed with your research. Reach out to both franchisees and the franchisor for answers to your questions.  

Scrutiny

Take your research seriously. Before you sign on, you need to know the following: what the prospective yield of the franchise is, its growth rate, the history of the business, and the market potential for your region. Now is not the time to be emotional. Every aspect of the franchise opportunity needs to be viewed with dispassionate scrutiny. Only after doing in-depth research can you be confident that a low-cost franchise is right for you. 

How can you be sure that you are finding a franchise that is the perfect fit? Start with a list. Write down all your interests and skills on one side, with all the low-cost franchise opportunities that seem relevant to those areas on the other. This is not about evaluating the options. You are simply making lists to help you eliminate opportunities based on your interests and skills.

If some of your opportunities are home-based, you will want to check the regulations in your area to determine whether a home-based option is feasible for you. If your home doesn’t meet regulations for any reason, you will need to move on from those options. 

Next, look at the financial investment involved. Those franchises can be crossed off if an option is clearly outside your budget. There are finance options available which we will discuss later in this guide. But even with financing, you should have a budget in mind that you are comfortable with and need to stay within. 

Finally, consider the product or service. Does it have a history of customer interest that proves it’s not a fad? Think about the franchisor. What is its reputation? If any options are listed that throw up red flags, they can be eliminated. 

Take a fresh look at your list. With what remains, ask yourself honestly if you have the skills and resources necessary to succeed at the franchise opportunities that are still listed. When you talk to the franchisor and other franchisees about the skills needed, can you honestly say you possess those skills? If you don’t, no amount of passion or interest is likely to help you succeed. Indeed, you can learn certain skills, but that demands a learning curve. How will that time impact you financially?  

Now you should have reduced your list to a handful of opportunities, each a potentially perfect fit for your interests, skills, and budget. Next, consider how each fits in your market. Will you have competitors? Will your product or service stand apart from them?  

So long as you have been honest in creating your list, it should contain only those franchise opportunities with the greatest potential for success. The final decision will hinge on a few factors: Do you like the franchisor? In general, it’s a good idea to get along with someone you are going into business with. Any personality clashes or severe differences of opinion during your discussions should be warning signs to look elsewhere.

Finally, how has the franchise you’re interested in performed historically? The Franchise Disclosure Document sent to you by the franchisor will give you this information. Current franchisees can be another source. Talk to as many as you can — especially any operating in markets like yours. This will give you an honest assessment of what you can expect before investing your money.

Details of your investment.

A significant advantage of an affordable franchise is it requires no real estate. Removing that component allows for a much lower cost of entry. But you will still have start-up costs and ongoing fees, which can vary greatly from one franchise to the next. Make sure you have a clear picture of all that is expected of you financially. 

You need to know the initial costs and what you’re responsible for each month. Pay close attention to the information contained in the Franchise Disclosure Document. If you have questions, don’t hesitate to talk to the franchisor to clarify any figures you don’t understand. And again, fellow franchisees can be an excellent resource for firsthand accounts. 

To compare one opportunity to another, focus on two numbers:

Initial Fees

Called a “franchise fee,” this is what you pay when you buy into a franchise. This is the cost of entering the franchise system. Generally, you pay a flat rate to the franchisor when you sign a franchise agreement.

Ongoing Fees

Recurring and occasional fees, including royalties, are required by almost all franchisors in return for their continuing support. Usually, royalty fees are a percentage of sales. Some companies may charge a flat fee weekly, monthly or yearly basis. 

For those not in a position to self-finance the purchase of their low-cost franchise, financing options do exist. Some people may even access financial support from a family member or borrow from their own 401(k) accounts, which is permitted for business start-ups. This includes traditional bank loans — if you have good credit and collateral — although it’s usually wise to investigate a Small Business Administration (SBA) loan, which can offer better terms. But start with the franchisor. They may offer financing at even more attractive terms than any other source. Options exist to finance your dream; all it takes is some research to determine the best choice for you.

Franchise Buyers' Checklist

Investing in a franchise, even a low-cost franchise, is still a significant expenditure that requires thorough due diligence. When you are serious about finding the right franchise for you, low-cost or otherwise, doing your homework is essential. It’s also the best way to ensure you maximize your success odds.

This checklist will help keep you on track.

Next steps.

For those who dream of owning their own business, investing in an affordable franchise represents the chance to control your destiny and financial future. Entrepreneurial dreams aren’t only for those with deep pockets or lots of business experience. Thanks to low-cost franchise options, there’s a world of possibilities for all manner of people to explore so they can realize their business ownership dreams. It’s just a matter of researching to find the best opportunity for you. Take the next step and start exploring! 

Let Frannexus Be Your Guide!

If you are considering investing in a franchise, don’t take the chance of choosing the wrong one and not achieving your goals. Learn from the experience of others in the franchise field, like a franchise coach, to have the greatest likelihood not just of succeeding but exceeding what you think is possible. At Frannexus, we have the expertise, knowledge, and experience to help you achieve your financial and personal goals. The right match is waiting for you, and Frannexus is the matchmaker to find your franchise soulmate.

Read more. Why Should I Work with a Franchise Consultant?

Find out if franchise business ownership is for you.

Start the survey.

While it may feel like the pandemic has stopped so much in our lives, it doesn’t appear to have slowed down the growth of new businesses. According to the U.S. Census Bureau, about 50% more new businesses started in the U.S. in 2021 than in any year in history. The pandemic has spurred the entrepreneurial-minded, meaning growth for many new and existing franchise brands is on an upswing.   

But that doesn’t mean that all franchises will be equally successful. One thing that the pandemic made clear, and which continues to hold sway, is that franchises that could lean into the call for things like delivery food service, boutique fitness, and service franchise offerings have experienced much greater success over the past several years.

Any economic damage that franchises may have incurred due to COVID-19 is anticipated to have been erased thanks to the projected 26,000-plus franchise locations that opened in 2021, which added nearly 800,000 new jobs and contributed $477 billion to the U.S. gross domestic product (GDP).

The International Franchise Association (IFA) expected franchising’s overall contribution to the economy to have grown by 7% in 2021, which would return it to pre-pandemic levels of economic output.

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If Americans love one thing, it's food! Lining the streets of rural and small-town America and the hustle and bustle of big cities, restaurants of all varieties provide everything from Italian fare to Tex-Mex. From fast food to fine dining, the choices are endless. It is no surprise that this year it is projected that Americans will spend as much as $771 billion on food, which is up from 2021, where revenue topped $600 billion. 

Due to the American love of all things cuisine, the restaurant sector not only survived the pandemic; those that pivoted to adapt to new circumstances were able to thrive. And in a post-pandemic recovery, forecasts are that there will be no end to the growth that the restaurant industry can experience in the next few years and beyond.

Restaurant franchises are more abundant than any other type of franchise in the American market. In 2021, a record 204,555 quick-food restaurants were in existence, up 1.3% from the year before. Additionally, 149,333 full-service restaurants are currently in operation. Franchises are the majority in the restaurant industry, mainly due to consumers' desire for consistency in products and services.

In the face of the COVID pandemic, fast or quick-food restaurants experienced modest growth, yes, but when other industries were trying to survive, fast food was still turning a profit. The quick-service restaurant category includes establishments that offer limited-service eateries, fast food restaurants, carry-out, and restaurants and other outlets that serve convenience meals that don't require long wait times and offer only limited service to customers.

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recently placed an NFL player into a fitness franchise. He is in his 20s, but with an NFL player’s average lifespan being about three years, he was already halfway, if not more, through his career. Over his years playing, he made just enough money to do something else with his future. And he chose franchise ownership, not ever anticipating before that a franchise would help with his transition into the next stage of his life. I was fortunate enough to help him move onto the next chapter. My job was to set him on a path to successful business ownership. 

When we first met, his main goal was to find something that would accommodate his family. He wanted to take the experience that he learned in the NFL and grow something of his own. I was honored to act as his mentor and to help navigate the process of franchise ownership. We used a very systematic approach to clarify how the next chapter of his life would look. Once we explored a multitude of franchise opportunities, we were able to find the best fit for him to see both satisfaction with his new path and success for his financial future.

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Whether you’ve dreamed of owning your own franchise business for years or have recently decided that you need a new path forward, realize this dream takes funding. If you aren’t sitting on a sizable nest egg, you may need to consider some innovative funding strategies to get your dream of owning a franchise off the ground. Your options include dipping into your retirement funds, applying for a small business loan or a conventional loan, taking out a securities-backed line of credit, or accessing the equity in your home. 

How can you decide which of these choices is suitable for you, your family, and your dream? A lot depends on your timeline, your risk tolerance, and your credit history. But there are other factors that you may need to consider as well. Additionally, you may find that a combination of several funding options is best. No matter what route you take to fund your franchise, it’s essential to be realistic about the amount of capital you need. Too many entrepreneurs underestimate the figure necessary to ensure their successful launch, thinking they simply need enough funds to get the business up and running. But the reality is that it often takes much longer than you realize for a new franchise to break even and turn a profit. Until that happens, you may be left unable to make necessary investments in the business or even pay yourself a salary without the proper backing capital.

Read on to learn more about what options are available to help you fund your franchise business.

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Finding the right franchise opportunity is a bit like marriage: you have to have many things in common and similar goals to achieve success. A franchise coach or consultant has to walk a fine line between consulting, coaching, and sometimes even prodding, depending on the day. There are over 3,600 franchise opportunities across twenty different industries, and at times, things can feel a bit overwhelming.

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Professionals are attracted to franchise ownership because they're tired of trading their time for money. Eventually, there's only so much time and so much money you can charge per hour. Owning a franchise provides the ultimate leverage. If you have a business that can operate without you having to be there all the time, you can leverage your time and leverage your capital.

Frannexus recently placed two NFL players into a franchise that were retiring and franchise ownership was their next chapter. What we realized with professional athletes and professionals anything is that their training had taught them to follow standard operating procedures. They followed a formula for success. That's why franchisors love them. They understand that following a recipe will result in the objective that they're looking for.

Get started exploring franchise opportunities!

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As we head into 2021, perceptions about work/life, or just life, in general, have changed for many who had their worlds turned upside down. People are finding that they enjoy the freedom of remote working or flexible scheduling, are considering switching gears and owning a business of their own. But if you want to find success right out the gate, don’t reinvent the wheel; your best option is to buy an established business that is already turning profits.

Statistics tell us that over the next twenty years, baby boomers will start to retire. And that, of their 12 million owned businesses, 70% will change hands. That equals a lot of opportunities for young entrepreneurs. Buying an existing business is a less risky proposition than starting from scratch. When you purchase an established business, it already has the equipment and inventory, a location, employees, customer loyalty, and proof that the business can make money. And if you choose to start a franchise, you have the support and first-hand knowledge from the franchisor to hit the ground running from day one.

Start exploring franchise opportunities!

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Address: 3400 N US 75-Central Expy 1000 Ste #110, Richardson, TX 75080
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