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Low-cost franchise businesses are equally well gaining traction on account of less investment, timely high returns, manageable risks and easy of operations.
The Salient Factors
The capital required in this model generally varies from Rs 5 - 25 lakhs.
Ease of Operations:
The time needed to start a low-cost franchise is comparatively low and it is easily manageable compared to bigger ventures.
Considering the low-cost nature of the investment, many people supplement their existing business with such a franchise opportunity.
The model offers flexible working hours. A study shows that compared to their counterparts, low-cost franchises work 40 or fewer hours per week.
Since low-cost franchisees typically are home-based businesses and do not require a lot of staff, it’s easier to achieve breakeven and profitability.
This is considered a low-risk bet that may allow the owner time to grow, who may choose to buy additional territories without investing much.
Since low-cost franchisees don’t require much overhead and staff, they may fare better through challenging economic times.
Word of Caution
While a low-cost franchise offers a wonderful opportunity to test the waters or supplement your income alongside a job or another business, there are certain pitfalls that you must learn to avoid.
Evaluate Hidden Expenses:
While investing in low-cost business a franchisee should remember to evaluate the hidden expenses, real estate and operational cost, and initial investment.
As the entry cost of these businesses is low, they require tactful management
strategies to boost profitability. The franchisees should try to align themselves with the franchisors’ vision and make use of their know-how of the business.