Everything You Need To Know About Low Cost Franchise Opportunities

Franchising is a big deal in the UK. It’s so big, in fact, that in this year’s BFA Franchise Report, Natwest estimated that the total contribution of franchising to the UK economy is around £17 billion. That’s an impressive figure in isolation. It’s even more impressive when you consider that it represents an increase of £2 billion since the bank last published a report on franchising back in 2015.

A celebration of franchising, the report also revealed that: 

  • There are 935 franchises actively operating in the UK
  • 710,000 are employed by UK franchising businesses
  • Around 1/3 of franchisees operate more than one unit
  • 60% of franchised units turn over more than £250,000
  • Franchises claimed profitability sits at 93>#/span###
  • Fewer than 1% of franchises close each year due to commercial failure

There’s certainly a wide range of positives to draw from the report and it clearly reflects the strengths of franchising as a business model.

What many people don’t realise, however, is that there are currently plenty of low cost franchise opportunities that make it more accessible than ever for investors to get involved in franchising.

What is a low cost franchise opportunity?

It’s generally accepted that any franchise that can be obtained for an initial investment of less than £10,000 can be described as a “low cost franchise opportunity”.

Typically, these franchises are less expensive than others because they involve fewer overheads and can be operated without expensive premises. Indeed, many are service-based and don’t require any physical storefront to generate a profit. Other low cost franchises can be operated online to allow investors to work from home or whilst travelling.

Available across a wide range of industries, investors receive all the same benefits as they would when investing in high-cost franchises. Specifically, they’re provided with all the necessary training and marketing materials to start their own turnkey business. Equipped with recognisable branding, they also have access to a network of professionals who are well-experienced in guiding investors through important business decisions.

What’s more, due to being at the more affordable end of the spectrum, the initial investment for a low-cost franchise is often made back inside of six months.

But that’s not the best part about low cost franchises.

No, the really attractive thing about them has to do with Natwest’s finding that “there are no significant differences between smaller and larger franchises in terms of profitability”.

What this means, of course, is that you don’t need to own an expensive franchise business in order to make a healthy income.

So, what’s the best franchise to own?

Identifying the biggest winners in terms of growth, Natwest’s research found that personal services, hotels, catering, and retail franchises enjoyed the greatest year on year gains since 2015.

Each of these sectors can be accessed through an investment in a low-cost franchise. Service franchises like cleaning and tutoring businesses, for example, can be purchased for less than £10,000.

To get an even better idea of which franchise is best suited to your needs and ambitions, the following findings from the BFA Franchise Report should help you reach a decision. Reviewing a large amount of franchising data, they found that: 

  • 93% of franchises operating from a store or retail location are profitable
  • 73% of franchises run from home or remotely are profitable
  • Business franchises have a 76% profitability
  • Retail franchises have a 78% profitability

Keeping these figures in mind when browsing franchises for sale makes it far easier to narrow down the options and identify which is the most ideal fit. As part of their research, Natwest interviewed 198 franchisees about their experience of franchising and found that: 

  • 78% approved of the support they were provided
  • 75% felt more confident having a standardised product or service to market
  • 56% felt that franchising provided them with a competitive advantage

Verifying each of the promised benefits of franchising, it’s clear that investors feel strongly about the gains that the business model provides.

Ultimately, low-cost franchise opportunities are a great way of owning a competitive business for less than £10,000. This is fairly significant when you consider that the average start-up in Britain spends well over £20,000 in its first year and stands a 60% chance of going bust in three years.

They also serve to help younger people enter the world of business with greater stability - currently 18% of franchise owners are under 30.

An affordable means of starting a business, the range of low-cost franchises featured on our site have been carefully selected and, where possible, testimonials have been provided to give a real insight into the world that newcomers can look forward to being part of.