Entrepreneurship

Best Budget Franchise Ideas In 2022

Cameron Fleming | 26 January 2022 | 2 years ago

Best budget franchise ideas in 2022

When you start out looking for franchise deals, it’s a good idea to start by checking out the best budget franchise ideas in 2022. The adjective “budget” does not imply cheap products and slim markups. On the contrary, budget franchises can offer highly profitable returns when run well, and they are available for below £10,000. You may even snag some at £2,000!

Read on to learn more about the best budget franchise ideas in 2022.

Why are they called budget franchises?

When a franchise is categorised as a budget franchise, this usually indicates that the capital investment required is below ten thousand pounds. In addition, their lower financial entry level is facilitated by them not needing premises or a special location in order to operate. For example, a swimming school needs a pool, but an online transcription service only needs Wi-Fi connection.

The venue flexibility is usually due to the franchise selling services or being solely online. Tutors, consultants and dropshipping retailers can function fully online, and the full list is extensive. There is a wide selection of budget franchises that you can choose from.

Even though the financial barrier to entry is low, these franchises can deliver impressive financial results, so they deserve a significant investment of your time and the guiding eye of an accountant from day one.

You can choose to operate these businesses from home as you juggle running a home and family or while you keep your main job or another business.

Are franchise investments a good idea?

The immediate benefit you get from choosing a franchise route is that the business comes with:

  • A recognisable brand
  • Established systems
  • Operations manuals
  • Hardware and equipment recommendations
  • Tested costings
  • Tested products
  • Location testing data
  • A stress-tested business
  • Regulation compliance
  • HR contract assistance
  • Existing supplier relationships
  • Commercial power
  • Buying power
  • Franchisee mentoring assistance (good brands offer this)
  • Staff training (good brands offer this)
  • Historical marketing data
  • I.T. support or recommended contractors
  • More lease options (because landlords like established brands)
The UK franchise industry refers to franchised business owners as being ‘in business for yourself” as opposed to defining them as being “in business BY YOURSELF”. A good franchise usually comes with the support of the franchisor team, as your success is their success.

The United Kingdom benefits from over 1,000 successful franchises with an estimated value of eighteen billion pounds. This highly profitable industry supplies jobs to over seven hundred and ten thousand people in the UK. That’s over twenty-four thousand pounds of turnover per headcount!

Here is a selection of different interesting franchisee demographics:

  • Franchisees below thirty years of age: 18%
  • Female franchisees: 37%

Extracting high-value from a budget franchise idea in 2022

Choosing a budget franchise instead of starting your own business from scratch places you into an industry with an immediate track record behind you. As a franchisee, you can be your own boss and potentially get a faster return on investment.

When you eventually want to find a buyer for the business, the brand adds significant commercial value to the business price tag. Franchised businesses are much easier to sell.

A huge benefit is that you are not buying an employment deal; you are buying an ownership deal. You are fully in control of all the business tasks, ranging from customer service to H.R. management and administration.

There is a definite correlation between what you put in to what you get out. There is also a correlation between how well you follow the franchisor’s tried and tested processes and products.

You do benefit from the mentoring, guidance and advice from the franchise head office, but the buck stops with you. You are responsible for the stability and growth of the business and upholding the brand’s values.

Finding the best budget franchise ideas in 2022

To find budget franchises to launch in 2022, you can find options in online franchise databases. You can also peruse business newspapers and trade papers for news on trending franchises, exceeding financial expectations or brands that are popular and have expanded into a franchise structure.

Sourcing information

Business brokers are also a source of information on franchise options, and they can guide you on what type of franchise might suit you and your needs.

After all this research, it is vital to do your own research about your shortlist. Read up about the market segment you are interested in; look up historical news on the franchise brands; speak to investment companies to get their opinion on the companies, and visit different branches and discreetly find out what the staff and management think about ‘head office’.

Understand what you will be getting for your investment and, more importantly, what you will not get for your investment. Ascertain if you have some leeway to do independent purchasing or if it’s all via head office stock. Find out about insurance deals, bookkeeping deals and so on. The more existing franchise outlets you speak to, and franchisees, the lower your decision-making risk will be.

Financial information

Collate as much turnover and profit info you can as well as other pertinent data relating to finances, then go through it in detail with your accountant. Project your businesses feasibility from these figures and draw up a business plan.

Next (or simultaneously), have the franchise agreement carefully looked over by a commercial lawyer that is franchise savvy. The British Franchise Association lists relevant lawyers that you could approach for assistance. It would be prudent to make sure they are not representing the franchisor.

Being a franchisee

Have you assessed yourself? Do you know the characteristics needed to be a successful franchisee? These are examples of beneficial characteristics:

  • Self-starter
  • Highly motivated
  • Tenacious
  • Ambitious
  • Able to cope with big challenges
  • Willing to follow proven processes
  • Willing to learn
From the diverse, best budget franchises you have shortlisted, you now need to choose the franchise that:

  • Will deliver the most profits
  • Fits with your personal parameters, goals and values
  • Is headed by a franchisor with a good reputation so a long-term partnership is feasible

Interviewing the franchisor

Before you put down your first payment to the selected franchisor, you need to go through a thorough question session (or two) with them and probe them as much as possible.

Don’t hold back because your livelihood is dependent on the thoroughness of your research and preparation. Your business plan is also highly dependent on the accuracy of the data that it was founded on.

Your many questions are also a show of interest and the seriousness with which you are considering their franchise. This is what a franchisor wants and expects.

We have collated some example questions that you could include in your meeting and to inspire you to think of others:

  • How long has the brand been in business?
  • How long has it been a franchised business?
  • What drove the decision to start franchising?
  • What are the franchise group’s short, medium and long-term plans?
  • How many franchisees have been successful? (Because you have done thorough research, you can verify this information against yours.)
  • What is the brand’s USP or USPs?
  • What are the absolute total costs of the franchise? Flat fees, initial fees, ongoing fees, other costs?
  • What is the minimum working capital required?
  • Are there restricted regions of trade per franchise?
  • Does the franchisor offer training?
  • Are business support and mentoring offered to the franchisee? How much and via what methodology?
  • What scalability has been built into the franchise model? Does the franchisor assist the franchisee when an established business wants to go to the next level?
  • What is the contract duration, and what are the requirements to be eligible for renewal?

Best budget franchises

The market segments that have shown the best growth over the past years include:

  • Personal services
  • Mobile franchises, e.g. food van
  • Food and catering
  • Health and fitness
  • Elderly care
We could provide a comprehensive list, but the point of any business, franchise or not, is to choose something that you care about and are deeply interested in.

With a franchise, you must choose a brand that you respect and share similar values with. You should also be certain you can develop a workable partnership with the franchisor and the group head office team.

A NatWest industry survey pegs the average franchise setup cost to be nearly sixty thousand pounds, and over 50% have a total income of more than a quarter of a million pounds. In addition, over 90% are profitable.

The survey also reported that the franchisees’ business size did not affect profit percentages, which is great news.

Franchise brands such as Additional Resources and Fantastic Services have a good reputation as budget franchises.

A mail and parcel delivery specialist franchise is a good example of a budget mobile franchise as well as home cleaning, gardening and pest control services.

You can find franchise deals for below two thousand pounds in these sectors.

Other great budget franchise ideas are burger eatery franchises, gym and fitness franchises, lifestyle franchises and travel agencies.

The NatWest survey also reported that nearly 40% of franchises could be home-based, which opens up many opportunities for men and women who want to balance work and home life.

Home-based franchises

Working from home sounds great, but it can prove hard when trying to maintain focus, tenacity and discipline. Your home insurer and home loan supplier will need to know if a business operates out of the premises. There may also be a requirement to notify the local council if customer numbers or despatches grow to the point of affecting neighbours.

At a certain point, you will need to move the business away from home or it will affect your ability to re-energise at the end of the day. It is important to keep home life separate from business life.

Financing franchises

Finance institutions favour established franchise brands and will offer up to two-thirds of the setup costs. A newly launched franchise, of a stable brand, will attract offers of up to half of the setup costs from lenders.

These figures sound large, which is correct, but that is due to the franchise market having a very good track record in the UK. They far outstrip the success of startups launched by individuals, half of which shut down before their fifth anniversary.

Work carefully with your accountant and make sure you secure the appropriate amount of startup capital. Underfinancing is the highest contributing factor to franchise failures.

Budget franchise business plans

As mentioned in the financial information paragraph, your business success depends on a business plan, your adherence to it and your ongoing updating of it.

A business plan is not only the steering gear of your business but it is a key element in attracting finance, either via lending institutions or various types of investors.

Even though there are hundreds, if not thousands, of articles written about the critical importance of a business plan, countless entrepreneurs ignore the gems of knowledge published by expert business people.

For some reason, there is often a reluctance to commit the ideas and plans to writing, or there is a lack of will to invest the time in research. In either of these instances, the best choice is to rather not start the business and waste all that startup capital. If you are not prepared to conduct business from the start like a professional business owner, then rather seek employment elsewhere.

A well-written business plan is not the be-all and end-all; it is merely a fundamental cornerstone and steering gear all-in-one. You still need:

  • A good business idea
  • Sufficient business acumen to reach good business decisions
  • The ability to establish strategies
  • The ability to lead and execute operations
  • The ability to gather the right people around you
Make sure your business plan is factual and concise rather than a rambling wishlist. It should contain information such as the below suggestions:

  • Detailed and pertinent personal information
  • Detailed information on:
    • The franchise and its brand value
    • The franchisor and their track record
    • The market segment and its history
  • SWOT
  • The goals and objectives of your business, including the scalability of your business to meet those goals. Break it down into short, medium and long-term.
  • Financial chapters, covering:
    • Profit and loss statement
    • Cash flow projections
    • Balance sheet
  • Marketing strategy
You are now ready to launch into the world of franchises. All you need now is courage, tenacity and your impressive skills. Good luck!

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