“Everybody knows 7-11 and Dunkin
Donuts because they have physical
locations everywhere.”
Franchisees may need to work extra hard to
differentiate their businesses from others
like them in their communities—often
without a lot of local marketing support
fromthe national office.
“The drawback of a low-cost franchise is it
limits the amount of bells and whistles the
franchisor can give to each franchisee,” said
Heaven's Best Carpet Cleaning CEO
Howard.
It's important for anyone considering a
lower-cost franchise opportunity to be
realistic about what they're going to get out
of it and what they need to put into it to be
successful.
“Just because it's low cost doesn't necessarily
mean you are going to earn profits
sooner—youmay earn no profits,” said Paul
Davis'sKing.
“Franchise candidates need to look at the
total cost of entry, the real cash required to
get in, and how much they need to finance.
They need to ask, 'What is this business
model and how much capital is it going to
take tokeep it operating?'”
Many owners of low-cost franchises are able
to run their businesses from their homes,
work their own hours, and keep their full-
time jobs, which can be both good and bad
when it comes to the long-term success of
the business.
“The cons of a low-cost franchise can be
that some candidates forget they are truly
starting their own business, not just
acquiring a job,” said Money Mailer's
Mulloy. “They must see this as a long-term
commitment with a need to work hard in
the start-up period of the franchise business
to establish a solid financial base.”
With increased flexibility, sometimes
comes reduced revenue potential. Not all
low-cost franchise opportunities provide a
full-time salary (especially those concepts
that don't require a full-time time
106 | BusinessWorld | August-September 2014
