Getting your hands on affordable franchise opportunities
Dion Santamaria| CEO | Towncars Networks Australia
Many people are eager to become their own bosses and have complete control of their business. Buying your own franchise business could be a wise long-term investment but finding the start-up capital to turn your ambitions into a reality may prove to be more difficult than you think. Thankfully, finding a franchise opportunity that requires a low start-up cost presents a viable option, with many franchise opportunities offering low start up costs.
Dion Santamaria, CEO of Towncars Networks Australia, a franchise that offers a pre-booked chauffeur-style service at taxi rates, shares with us some of his insights for potential franchisees seeking low start-up capital franchise opportunities.
It is widespread the idea that buying into a franchise requires an exorbitant savings account or a large amount of investment capital lined up. Luckily, getting your hands on great franchise opportunities doesn't necessarily have to be expensive, thanks to the sprouting of affordable systems such as the likes of home-based franchises, cleaning franchises and mobile franchises.
One of the great advantages of a low-cost franchise business is obviously the low threshold from a financing perspective as less start-up capital is required to become a business owner.
Moreover, grabbing affordable franchise opportunities might prove even easier if you’ve got some savings as then you don’t need to apply for loans or borrow against your assets to fund your franchise purchase.
Another point to consider is that it’s easier to get started due to the low overhead. As an example, many of these franchises don’t need retail premises, office space or extra staff (at least in the start-up phase) and that reduces the average set–up time. It is also possible to rapidly expand your business, as you would likely achieve the break-even point a lot sooner and you will have more funds to reinvest back into the business for marketing, human resources and expansion.
While low cost franchises can seem appealing purely because of the low cost I recommend that potential franchisees do check out their options really carefully. Check to make sure that the business has a proven track record and offers real value for money with a fair balance between franchise fees and the support and system offered.
"Moreover, grabbing affordable franchise opportunities might prove even easier if you’ve got some savings as then you don’t need to apply for loans or borrow against your assets to fund your franchise purchase."
It's all well and good having a low entry cost but what if the ongoing costs are high? In the case of Towncars Franchise, we endeavour to keep the process as simple as possible to reduce operating and administration cost for the franchisees.
The chauffeur job is really all about simplicity, starting from the fee system. We have simplified our franchisor fees system into a single per-dispatch fee that covers all our support (corporate account management, account receivables, marketing).
From a functionality standpoint, the simplicity of the business model – guaranteed by the centralisation of the booking systems and account receivables - really takes tasks off the franchisees so it allows them to focus on providing the highest customer service possible without worrying about paperwork and follow-ups. We also try to support franchisees in generating new customers both with booking management and marketing, so they can concentrate on treating customers well and building a loyal customer following.
For this reason the dispatch fee covers all our support and marketing and has the advantage of not crushing our new franchisees in the start-up phase with multiple fees while their customer base is being built.
Another important aspect of setting up a franchise business on a tight budget is the strategy used by the franchisor to drive down running costs. Some franchisors purchase second-hand or refurbished equipment that is as good as new equipment. Second hand equipment may drive down the start up costs in the short term, but it may have greater servicing and running costs in the long term.
In terms of driving down running costs for Towncars Franchise, we had to evaluate our vehicle fleet options. Unlike our competitors who use high-end vehicles such as Jaguars and Mercedes Benz, we opted for the Ford G6E. The vehicle is a real head turner and maintains a luxurious feel while at the same time being within the affordable ranges of potential franchisees and remains in line with keeping running costs low in the long term as our vehicles are much cheaper to service than a Mercedes Benz. We use LPG to fuel our fleet which is cheaper to run and it’s also better for the environment compared to using petrol.
Remember when looking at low cost franchise opportunities to look beyond the initial price tag. Low cost doesn’t always mean value for money so consider your investment levels, your breakeven point and your ongoing running costs. There are a lot of great low cost franchise opportunities out there; it’s just about finding the right fit for you. Best of luck in your franchise business research.