You dream of franchise ownership, but a quick look at your bank account balance quickly jolts you back to reality. These days, with credit tight and savings slim, purchasing a franchise can seem downright impossible. But before you write the idea off for good, you may want to think again. There are ways to become a franchisee without busting the bank; read on for some ideas.
As a way to ease investors into franchise ownership despite tough economic times, some franchisors are offering creative solutions. One such franchise is Snap-on Tools, which, through its Gateway Franchise Program, allows a franchisee to operate a location for two years in order to build up cash equity in the business before making the full investment. “We want to make owning a Snap-on franchise a viable option for anyone who has a passion for this business,” explains Mike Doweidt, director of Snap-on Franchising. “Innovative options such as the Gateway Program make it possible.”
Dale Hill is one franchisee-in-transition who worked as a mechanic for 18 years but was able to pursue franchising two years ago thanks to Snap-on’s Gateway Program. During his two years in the program, the economy got even more rocky than when he started, and the cost of fuel reached an all-time high. However, despite the hurdles, Hill is glad he took advantage of the Snap-on opportunity. “I looked into Snap-on 10 years ago, and reconsidered it when I found out about the ability to take advantage of this gradual ownership program,” Hill says. “[The Gateway program] made it attractive to me.”
In general, home-based franchises tend to offer significantly more affordable opportunities for franchise ownership. And, fortunately for you, running a businesses from home is quickly becoming the norm. Without the daunting overhead expenses of an office or storefront location, the ease of entry is much greater. Once they’re in business, franchisees can focus on growing their operation, not counting their pennies.
All the franchisees of Baby Boot Camp – a franchise specializing in prenatal and postpartum fitness and nutrition programs – are home-based. The fact that the franchise can be run from home has been a huge selling point and has helped the franchise experience rapid growth over the last several years. CEO and founder Kristen Horler reports that the number of franchisees has doubled year over year since she started franchising in 2005; the company currently has more than 100. “The franchise system is built on low cost to owners and community-based programs,” Horler explains, “which has enabled us to continue to grow despite economic fluctuations.”
If dropping everything to start your own franchise isn’t an option, consider easing into franchise ownership with a part-time franchise opportunity. Mark and Diane Popenhagen just purchased their Caring Transitions franchise last summer. While they devote a significant amount of time to the franchise, they continue to work at the jobs they held before starting the franchise. Mark does marketing and project management in addition to working as a chaplain, while Diane is a substitute teacher and freelance writer and editor.
It requires a lot of juggling, but for the Popenhagens, owning a part-time franchise has allowed them to take the transition to entrepreneurship one step at a time. “The ability to develop multiple streams of income has eased the fear and anxiety of jumping into a business that requires time and patience to develop,” says Mark. “There is always much to learn with any business. Caring Transitions offers such a wide range of services that knowing I didn’t have to have it all mastered in a week or I would starve, helped to make the decision easier.”
More Ways to Save
Hungry for more ways to save on a franchise? Here are a couple more options.
Franchisor Direct Financing. “There are a few franchisors that offer direct financing to their new franchisees. In today’s market that can make all the difference in the world in terms of making the business more affordable for purchase,” says Jeff Elgin, CEO of FranChoice Inc., a network of franchise referral consultants.
Seller Financing on Resales. In a situation such as this, the existing owner takes a contract back and effectively becomes the lender on the sale of his business. The buyer might get just the price break they’re looking for. “This has always been a reasonably common form of financing on existing businesses,” says Elgin, “but in today’s market it happens virtually every time.”
Ask, and You Might Receive
When researching a franchise, don’t be afraid to ask if the franchise company is offering any special incentives or programs. In today’s economy, many franchise companies have initiated new financing incentives and programs that may or may not be listed on their websites.
Also be sure to ask if there’s a way to run the business part-time in the beginning or to operate it from home. Even if the franchisor doesn’t currently offer a part-time or home-based option, a company that gets enough inquiries from potential franchisees about these alternatives may be inspired to develop a program that meets these needs.
For a complete list of franchise opportunities, visit the AllBusiness.com Franchise Directory.
Sara Wilson is a freelance writer who specializes in issues related to small businesses. Contact her at firstname.lastname@example.org