Business View Magazine
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Franchising
Octob r – Business View
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umbrella. Food franchises, for example, which typically
require a big investment in real estate, equipment
and supplies, don’t usually have much of a presence
on our annual low-cost franchise ranking. However,
some mobile food concepts, like Repicci’s Italian Ice
and Happy and Healthy Products, offer franchisees the
opportunity to run a food-related business without the
large, up-front investment.
The franchise businesses represented in this report
have an average initial investment of less than $100,000,
but within the different brands, there is great variety of
options and investment levels available. Some franchise
opportunities can be started for less than $5,000, while
others cost $90,000.
Most of the franchise executives we spoke with for
this report said franchisees are using their available
savings, 401K, and/or family and friend investments to
purchase their businesses. Although it may seem like
getting a loan for a lower-investment business would be
easier, that’s not the case for most low-cost franchises.
“We don’t have a lot of hard assets so it’s very difficult
to get a bank loan for our franchise opportunity,” said
Dan Smith, CEO of Bevintel, a beverage inventory
management franchise servicing bars and restaurants.
To offset this, a number of franchise businesses offer
in-house financing programs. “We finance 50 percent
of the franchise fee, which sends a strong partnership
message to the franchisee,” Smith said. Similarly,
U.S. Lawns, Help-U-Sell, and Heaven’s Best Carpet
Cleaning all offer some form of in-house franchise
financing options.
“So far this year, most new franchisees have taken
us up on our in-house financing,” said Heaven’s Best
CEO Cody Howard. “We require $14,450 up front,
and we will finance the balance of $14,450 over a five-
year period.”
