Capital Growth

Four Franchises You Can Start For Under $10,000

If you’ve thought about being an entrepreneur, chances are you’ve come across the business model of franchising.

A franchise business model works like this: The company grants another you the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications. In return, you pay a one-time startup fee and a portion of your revenue to the parent company.

By franchising, you gain immediate name recognition, tried and tested products, standard building design and décor, detailed techniques in running and promoting the business, training of employees, and ongoing help in promoting and upgrading of the products. Basically, its a package of an already successful business, that you buy and replicate.

The independence and flexibility of a small business owner with the infrastructure and support of a large corporation. That’s what you get when you buy into a franchise.

A franchise can be extremely lucrative, especially if you’re in the right location, and if you do it right, it could be a low maintenance money tree. However, these benefits come at a cost – ranging from as low as tens of thousands of dollars to north of a million, which is what anyone buying a McDonald’s can expect to pay, or even more (a Denny’s will cost you $2 million). Even a “low cost” franchise, Subway, ranges from $116,000 to 262,850.

However, there are a few franchises that are reachable with $10,000 cash and/or a(n) SBA loan. You can use them as a stepping stone on to bigger and better companies, and they could be very lucrative (often lower cost franchises fill specific niches, and if you can find a market that is missing this solution, bingo.)

Before I list these five easily reachable franchises lets talk money (specifically SBA loans). When starting up a franchise there are a few costs you should know about:

  1. The Franchise Fee. Normally this is a one-time payment when starting up your company. It varies from company to company but usually is the highest startup other than real estate.
  2. Royalty or Ongoing Franchise Fees. Sometimes, rather than paying a single time franchise fee, you need to pay in ongoing monthly fee. You also will need to pay a royalty fee on your profits. For example, for every $100 of product sold, you’ll be sending off $50 to the franchiser.
  3. Advertising Fees. A lot of big franchises require you to pay into a group advertisement fund, that runs tv ads and other advertisements like that. This might not always be the case, especially with smaller companies.

A lot of these fees add up, and you quickly reach the $10,000 mark, and usually surpass it. You’ll find that not many businesses can be started with $10,000, especially if you are buying the retail space. However, you can have only $10,000 in cash and start up a franchise location. You can do this by taking out a small business loan and leveraging your money.

These loans are called SBA Loans and insured by the government. Because of this, they tend to favor Borrowers, with low rates and good acceptance if you actually need it. However, there’s a lot more paperwork and a longer wait period because of this. The loan allows you to take your $10,000 and make it into $50,000 or $75,000. Then, that franchise location isn’t so far out of reach.

There are also other loans like franchisor loans and Commercial Bank loans, which have their own pros and cons. However, you should understand that debt is an important part of the business, and if you manage it correctly, it’s not bad.

With that in mind, here are 4 franchises you can start with only $10,000.

1. Chester’s

Startup Range: $4.6k – $303.1k

A fried chicken restaurant, similar to Wendy’s, McDonald’s or Burger King. However, differs because it is so low cost to start up. It also is in locations that its competition is not, such as truck stops and small locations.

2. BuildingStars

Startup Range: $2.2k to $53.2k

Nightly cleaning services, floor care, and other sanitation services. Cleaning services are low cost to start up, and if you find the right location you can have a lot of revenue come in.

3. Jan-Pro

Startup Range: $3.6k – $66k

Jan-Pro franchisees offer commercial cleaning services to businesses such as car dealerships, gyms, banks, churches, schools and offices. The company’s “Cleaning Greener” initiative emphasizes the use of cleaning products that require fewer chemicals to clean more.

4. H&R Block

Startup Range: $26k – $149.3k

A tax preparation company that helps file tax returns and more, such as payroll, and business consulting services. Can be extremely profitable if in the correct location.
Keep in mind that starter cost varies widely from location to location. It all depends on how much you can read the retail space for, as well as a varying amount of other factors.

That is why I have a range of the start-up costs. Also, understand that about a $30,000 (you may be able to stretch it to $50,000, but this is rare) startup cost is achievable with $10,000 in alone.

With this knowledge, get out there and make something happen. You can’t succeed if you don’t try.

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