The economy may be improving, but access to capital for franchise investment is still difficult to come by for many people who want to start their own business, which means lower start-up costs could make all the difference. Franchise advisors took a look at all the options and found several that have an initial (although in some cases not total) cost of around $100,000. A few that remain at or below that number include pest control franchise Mosquito Squad ($65,000), the property damage restoration company PuroClean ($100,000), house-painting firm ProTect Painters ($99,100). For more on this continue reading the following article from TheStreet.
Starting a business is tough enough these days, so why not choose one that doesn’t clear out your savings?
It’s no secret that franchise investing provides, in many cases, a proven model of business that first-time owners can rely upon. Besides a franchisee playbook, parent companies also offer ongoing support and assistance in the form of marketing, technical help and sourcing, for instance.
Yet today’s franchised concepts are much different than that of even, say, five years ago. The recession put a damper — in some cases a permanent damper — on traditional capital access to finance business ventures. Many of today’s franchisees are looking for more economical investments.
Service-based franchises require much lower investment than the large franchised names we know of today.
Independent franchise advisor Joel Libava cautioned though that interested parties do need to do their homework. While there are plenty of decent franchise opportunities in the $100,000 range, many of them are either home-based or small-office based, meaning that the franchisee better be up on his sales skill sets to get business.
"Make sure that you are an outgoing, engaging person before you even start to look at franchises that are in the $100,000 range," Libava said. "This is not the time to see if you can become a great salesperson. It’s too expensive of an experiment and if it was a failed one, it could take years to recover from, depending on your financial situation."
"But if you are a strong salesperson, and love being out of the office selling, as long as you’re comfortable with rules, I recommend spending a good deal of time investigating low-investment franchises," he wrote in an email. (Libava disclosed that he recently did content marketing for Wholesome Tummies, a franchise listed in this article.)
Full Disclosure: Some of the companies listed below offer investment ranges that can go above $100,000, in some cases hundreds of thousands above that limit. We’ve chosen to include certain concepts because of the growth prospects for their niche industry or because the concepts have lower-end options for someone with a $100,000 investment budget.
That said, here are nine concepts to consider:
1. Cellairis
Wireless accessories and cell phone repair
Initial Investment: $36,810-375,000
Cellairis is a wireless accessories and cell phone repair business operating more than 700 kiosks and stores across North America, South America and Europe. The company’s goal is to reach 1,000 stores by the end of 2013 and 1,500 by 2015.
The wireless accessories industry was valued at $34 billion in 2011 and is projected to grow to $50 billion by 2015.
As the desire by consumers to personalize increases, this has spread to wireless accessories including phone cases, headphones and tablet holders — all items that Cellairis sells. Also, with the recent addition of repair, customers now have a convenient place to take the expensive devices that they rely on so heavily when the need arises, the company said.
Cellairis franchisee start-up expenses range from $36,810 to $375,000, but there are ways to get into this hot industry with less than $100,000 by purchasing one of the company’s lower-end options, such as a kiosk location or a mobile cart.
Potential franchisees need to have minimum liquid assets of $50,000, good to excellent credit, prior business management and a total net worth of at least $150,000, according to Cellairis’ Web site.
2. ActionCOACH
Business coaching/executive coaching
Initial Investment: $61,000-$300,000
ActionCoach helps small-business owners, who are already in business or transitioning out of corporate life, with any business decision by providing an objective view on things like finances, business operations and business planning.
ActionCoach currently has over 1,000 offices in 26 countries and continues to grow.
With jobs for experienced executives harder to come by, more and more people are becoming entrepreneurs — a trend that will no doubt continue.
ActionCoach has several options for franchisees — from a single practice unit in a designated territory all the way up to a master franchisee license.
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
The initial investment total for a single practice unit is roughly $61,000 to $75,000. For a firm with business coaches working under the franchisee, an initial investment ranges closer to $275,000.
3. Mosquito Squad
Outdoor Pest Control
Initial Investment: $65,000
Looking for a great starter franchise? Mosquito Squad may be an option.
Mosquito Squad creates a pest and disease-free outdoor living space for homeowners and their pets.
The company was bought by Outdoor Living Brands in 2009. At the time it only had 17 units. Today the company has 135 franchised units across the U.S. and is adding about 25-30 units a year, said David Buchel, its franchise recruitment coordinator.
Initial investment is low and includes a $25,000 franchise fee, $25,000 for marketing purposes and about $15,000 on equipment.
According to its Web site, customer retention rate was about 72% from 2010 to 2011. A franchisee’s average annual revenue hovers around $355,000 for those in business at least three years, according to the Mosquito Squad Web site.
The concept is appealing to franchisees because the business model is simple.
"It’s a route-based business. It’s not overly involved. You’ve got low overhead, a low number of employees to start, the business is scalable so as the business grows you grow," Buchel said. "It’s a wonderful starter business … for someone that’s never come into franchising before. It’s very easy to wrap your head around."
4. PuroClean
Property damage restoration
Initial Investment: $72,000 – $100,000
PuroClean serves the $210 billion property damage restoration industry in the U.S. and Canada. Known as the "Paramedics of Property Damage" among insurance professionals and property owners, PuroClean certified technicians provide emergency services to restore residential and commercial properties damaged by water, fire, smoke, mold and biohazard events.
The company has 253 franchised locations.
PuroClean operates in a virtually recession-proof industry, servicing everyday mishaps that occur in the home, as well as catastrophe events like hurricanes, floods and fires.
5. Doc Popcorn
Popcorn retail franchise
Initial Investment: $72,000-$160,000
Doc Popcorn, is a Boulder, Colo.-based franchisor of fresh-popped natural flavored popcorn. Ten years ago, Rob and Renee Israel launched Doc Popcorn, when natural food products did not get a fraction of the attention they get today.
The company uses non-GMO popping corn, 100% corn oil and quality natural ingredients to produce a snack that’s low in fat, cholesterol free and has zero grams of trans fat. All of Doc Popcorn’s flavors are gluten-free, wheat-free and nut-free.
The company has 83 units in 25 states, with plans for 100 units to be open by the end of the year.
"We are revolutionizing how popcorn is produced and served in high-traffic venues by taking a commodity product, much like Starbucks (SBUX) did with coffee, and making it better tasting, higher-quality and better for you," the company said. "Doc Popcorn is a low-cost business opportunity for people who want to own and operate a simple business model that is fun for the whole family."
Franchisees, known as POPrietors, can buy a single unit or multiple units in different sizes for different types of venues — a PopKiosk, a mobile PopCart, the larger PopShop, as well as Master Franchise agreements internationally.
To qualify for a PopCart operation, franchisees need to demonstrate liquid capital available of at least $100,000.
6. Wholesome Tummies
School lunch delivery service
Initial Investment: $77,000-$115,000
Wholesome Tummies is joining the small but growing group of companies that are looking to break the school lunch barrier by providing a healthy lunch delivery service.
The franchisee receives orders via parents and prepares meals fresh each day in a commercial kitchen. Meals are then delivered to school in time for lunch or served right on campus in schools with on-site kitchens.
Wholesome Tummies currently has 18 locations open, with plans to end 2013 with 25. It works with about 100 private and charter schools and is looking to expand. Eventually, the goal is for Wholesome Tummies to have 250 franchised locations, 2,000 school contracts and system-wide sales of $200 million, co-founder Debbie Blacher told TheStreet last month.
A start-up investment typically ranges from about $77,000 to $115,000, not terrible when compared to the hundreds of thousands needed for other fast-food franchises. The investment includes the $30,000 franchise fee and a $5,000 software license fee.
It also includes capital needed to hire a trained chef, kitchen staff and marketing team as well as lease — at least initially — a commissary kitchen.
7. BrightStar Care
In-home health care/senior care
Initial Investment: $90,378- $165,676
BrightStar Care is one of the most recognized names when it comes to in-home care. Through its 261 franchises in the U.S. and Canada, the company provides nursing facility services, both non-medical and medical, in the comfort of one’s home to seniors as well as younger aged people who need at-home care.
Each BrightStar Care franchise has a full-time RN Director of Nursing who creates a unique, personalized care plan for each client, acts as a trusted caregiving expert for clients’ families and makes supervisory visits to the home to make sure the plan of care is being followed and the client is enjoying the best quality of life possible. BrightStar franchises also provide healthcare staffing solutions to businesses on a temporary and permanent placement basis, the company says.
The rapidly growing senior demographic is creating opportunities for people to create businesses surrounding the needs of this age group, a trend that is has long-term opportunities, given the aging baby boomer right behind them.
The demand for at-home care services continues to grow at an alarming rate as more and more people choose home senior care as a way to care for their aging parent or loved one, BrightStar said. The increasing demand for these services has made a home-care franchise and/or senior-care franchise one of the fastest growing business opportunities in the franchise industry.
8. Painting With a Twist
Recreational "paint and sip" studio
Initial Investment: $95,000-$135,000
Painting with a Twist is a fun and unique art studio experience, pairing instructional art with friends, wine (which is optional) and a lively instructor.. The first studio opened in 2007, when two friends decided to help rebuild their Hurricane Katrina-devastated community.
Painting with a Twist considers itself a category leader for the "paint and sip" niche. The company started franchising in 2009 and now has more than 100 studios in 17 states. It’s forecasting a doubling in size over the next two years with the addition of 100 new locations.
The Painting with a Twist experience appeals to a variety of segments including day, evening, companies, private parties, kids and public classes, the company said. So-called Twisters enjoy the experience as much as the end product and the sessions are a great value to them.
"People love to do it," co-founder Catherine Deano told TheStreet at the International Franchise Expo in June. "They can’t believe that they painted something and they can’t wait to take it home and show it to their kids and show it to their husband."
Deano added that the company is getting franchise requests from people with varied experience, from former accountants to dental hygienists to retired school teachers. "We have a lot of people that wanted to get out of the rat race," she said.
But what’s most important is that franchisees give back to their communities.
"We’re looking for people who are vested in their community," Deano said. "That’s very important to us."
9. ProTect Painters
Residential painting services
Initial Investment: $99,100
ProTect Painters is a national franchise specializing in exterior and interior commercial and residential painting projects where there’s no painting involved for the owner, only managing paint crews. The combination of minimal investment and low overhead costs makes for ProTect Painters to be a profitable business with a low barrier of entry.
ProTect Painters currently has 51 locations, with another 12 signed franchise deals this year. The company’s sales to consumers have risen 79% year over year.
The housing recovery as well as a recovering consumer has fueled revenue growth for service-based franchises catering to homebuyers as well as those looking to spruce up their current homes.
ProTect Painters also said the business was untouched by the recent economic downturn, given that clients are both residential and commercial.
The commercial business accounts for about 20% of total business and has far less seasonality than home painting.
On the residential side, customers tend to repaint exteriors every five to seven years, the company says. The repeat business drives approximately 60% of overall revenue, it said.
This article was republished with permission from TheStreet.
