The Global Economy and Business

As franchise is more often used by sole proprietors or small companies the entry fee has to be rather low. Certainly, the word “low” has absolutely different meaning for different people (especially when they live in different countries). The fee acceptable for Northern Americans can become too high for Southern Americans. But in general studying the entry capital needed to become the franchise owner I found the following facts:
 

1. Most of franchisors establish the initial fee at the level of $30,000 and less.
 

2. It’s rather easy to find a good variant for $15,000-$20,000 in the appropriate sphere. You only need to spend a bit more time looking for it.
 

3. Low-cost variants usually require much less (or even no) additional initial capital as their business is service-oriented and in many cases home-based. As a result such kind of business doesn’t require money for land, expensive technological equipment and other physical stuff. Examples? Cleaning and personal services, retail and food sales, software sales, automotive and beauty-related retailers, travel or delivery agencies and so on.
 

4. But low entry fee can have (not necessary) some hidden problems. It can happen that you’ll buy only an idea or so-called “business opportunity” not a franchise in a perfect meaning of this concept. According to the legislation franchisors have to provide more support and services than a business opportunity. It means that paying less at the initial stage you may face some extra costs later. What will you prefer? Any way you face some opportunity cost…
 

To be continued…

This entry was posted on Monday, May 1st, 2006 at 5:47 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.