Do you want to start a business by buying a franchise with no money down? If YES, here are 10 best franchise opportunities for sale and their cost. First and foremost, it is nearly impossible to start a franchise without money. You’ll need to pay an initial franchise fee, and you will have other startup costs to contend with.
In addition, franchisors always want to see that you have some skin in the game in the form of a down payment. If it is too easy to walk away with nothing to lose, a franchisee may do just that. Initial fees and other startup costs can range from $10,000 to over $1 million depending on the type of business you want to start.
Fortunately, there are a number of available resources that you might consider to use when you want to raise the required down payment. So if you’re excited about a franchise opportunity, but don’t have adequate funds to move forward, here are some options to consider.
How To Obtain Funds For Your Franchise Business
1. Franchisor Financing
If you have already decided to franchise with a particular brand, then you can do some research if they offer franchisor financing. Note that a lot of formidable brands understand that their franchisees won’t come to the table with all the capital that is needed.
Ask the band if they provide funding options for their business partners to get started. However, this option may require you to have very good credit. The franchisor will also require to see some sort of investment from you into the business as well, to show a commitment to the venture.
2. SBA Loans
If you want long repayment terms and low interest rates, a conventional loan might suit your needs. Qualifying for this type of loan is difficult for any business owner — especially one that is new to the game. But, one good thing is that the Small Business Administration (SBA) makes it easier for people to get business loans with competitive rates and terms.
The SBA itself does not distribute loans. Instead, this government organization provides a guarantee on loans provided by banks, credit union, and other lenders, known as intermediaries. Since a large percentage of each loan is backed by the SBA, it’s easier for franchisees and other small business owners to be approved.
There are several types of SBA loans for franchisees, but one of the best is the SBA 7(a) loan. Note that with this loan, you may get up to $5 million with repayment terms starting at 7 years and going up to 25 years. Funds can be used for a variety of purposes including commercial real estate, equipment, franchise fees, and other startup costs.
Interest rates are quite competitive and are based on the prime rate plus up to 4.75%. Rates are based on the amount and duration of the loan. Learn more about SBA 7(a) loans. Another SBA loan option is the CDC/504 loan.
Note that with this option, a non – profit Certified Development Company (CDC) provides up to 40% of the amount needed by the franchisee. A traditional lender, such as your bank or credit union, provides up to 50% of the amount. With this option, you could contribute as little as 10% to receive the funding you need.
Rollovers for Business Startups (ROBS)
Have it in mind that taking money out of your retirement fund comes with lots of fees. However, with ROBS, you can limit these fees and get your money in just a matter of weeks. ROBS allows you to use your own retirement money to start your business, skipping the process of going to a lender entirely.
However, to qualify for a ROBS plan, you need to have a 401(k), 403(b), or an IRA account. You will also need to work with a ROBS provider to access the money, and that provider may charge you a small, one – time fee.
If you lack adequate capital to start the franchise on your own, you can consider bringing on a partner who can finance the project. Note that an investor can be a friend, family member, or even an old work colleague. Nonetheless, if you decide to follow this route, be aware that you’re giving up partial control of the business.
In addition, you will want to work with a partner that you trust entirely. And, it’s best to draw up a solid partnership agreement that outlines everyone’s responsibilities, rights, and allocation of profits.
As a startup, you might find it difficult to find a competitive business loan. Lenders tend to analyze and evaluate risk by looking at factors such as your personal and business credit profiles, annual revenues, and time in business.
Note that if you haven’t yet launched your business or you’re in the very early stages, finding funds with favourable rates and terms can be a challenge. One option you have is to take out a personal loan for business. When you apply, you use your personal information — personal credit score and history and annual income, for example — to qualify for funding. That loan can then be used to purchase your franchise or to fund other startup costs.
Home Equity Loans
If you own a home, you can decide to take out a home-based line of credit or a home equity loan. Note that both of these options take the value of the equity from your home to approve the loan or credit. Home equity is the difference between what your property is worth and what you owe on the property.
A home line of credit allows you to have access to cash, which is backed by the equity of your home. However, one drawback of the home equity loans is that you’re putting your property at risk if you end up defaulting on your loan. Additionally, home equity loans require a high credit score and good debt – to – income ratio for approval.
If you have some money in savings or another source of funding, shop around for lower – cost franchising opportunities. Have it in mind that big players are the most expensive to acquire and operate. But you can choose to focus your sights on more affordable opportunities that will allow you to break into business ownership.
Coupled with finding low – cost startups, you can also look for franchises that offer discounts to new owners. For instance, some franchisors offer discounts on franchising fees to women, minorities, or military service members and veterans.
10 Best Low Cost Franchises in the United States
The cost of acquiring some franchises can be quite expensive, but others are more affordable and therefore more accessible to hopeful franchisees with limited capital available. However, to help you make your dreams of franchise ownership a reality, here are 10 low cost franchises to Consider in the United States.
The Dream Vacations Franchise opportunity needs no inventory and comes with low overhead costs. It simply means there is minimal risk standing in the way of a dream career as a travel agent. Also note that the Dream Vacations team offers high – quality training and education with ongoing support to help franchise owners reach their goals.
Dream Vacations Franchise offers all of the tools you need to become a successful travel agent from home. Once you’ve applied and are a certified travel agent, you’ll receive an immersive 6 – day training to successfully launch your business.
- Initial investment: from $3,245
- Royalty Fees: 1.5 – 3%
JAN – PRO
JAN – PRO Franchising International is well renowned for its national network of nearly 5,000 Unit franchisees and 87 Master franchise owners. You can join JAN – PRO and become part of the #1 commercial cleaning franchise company in the world.
JAN – PRO provides home based franchise owners with a start – up package that includes your own cleaning accounts, initial equipment, and education on JAN – PRO cleaning standards, constant support and the opportunity to build a sustainable business in the community. With a JAN – PRO commercial cleaning business, you control your future.
- Initial investment: from $3,985
- Royalty Fees: 10%
Stratus Building Solutions
Stratus Building Solutions is well known commercial cleaning franchising company serving businesses in the United States. Note that the company offers commercial janitorial, green service selection, floor and carpet cleaning and maintenance, restroom sanitization, pressure washing, post construction site clearing and cleaning, and day porter services; and hygienic cleaning and public health options for schools and medical clinics.
- Initial investment: from $4,350
- Royalty Fees: 5%
Proforma is the leading franchise opportunity in the print and promotional products industry. No inventory, equipment, or retail storefront is required. This company offers a great opportunity for individuals who enjoy selling to middle – market, upper – market, and Fortune 500 companies.
The franchise can be operated from a home – based or small leased office space environment. Proforma franchise owners are provided with comprehensive training, proven marketing & sales techniques, and business development tools.
- Initial investment: from $5,030
- Royalty Fees: 5 – 8%
Anago Cleaning Systems
Anago Cleaning Systems, Inc. offers a wonderful commercial cleaning and janitorial franchise system to willing entrepreneurs in the United States. At Anago, they offer a proven method for making their franchises a success, and those methods are something you can and will tap into as owner of your own janitorial business franchise.
Anago business model provides a framework of opportunities benefiting Master and Unit Franchisees, as well as your clients. It is a true testament to what working toward a mutual goal can accomplish.
- Initial investment: from $10,440
- Royalty Fees: 10%
Grown out of the popular StrollerStrides fitness programs for mothers of young children, Fit4Mom offers nationwide franchising opportunities with very low start – up costs and attractive scheduling options.
Note that becoming a Fit4Mom franchisee allows fitness instructors to conduct their own Stroller Strides Classes, Fit4Baby Classes, Body Back Classes, Stroller Barre Classes, and Fit4Mom Run Club. You can conduct the classes in your own community and on a schedule that is convenient to you.
- Franchise Fee: $5,495 to $10,495
- Initial Investment: $6,205 to $24,285
Chester’s Chicken is a renowned fried chicken quick – service restaurant in the United States and has locations in college campuses, airports, convenience stores, truck stops and supermarkets. Chester’s offers consumers a high – quality chicken product, cooked to perfection, with a unique taste and style. Note that all partners have great opportunity to enter the QSR industry with flexible locations and store design.
- Initial investment: from $12,000
- Royalty Fees: 5%
Cruise Planners, an American Express Travel Representative, is the largest home – based travel advisor franchise network in the United States. As a Cruise Planners® travel franchise owner, you enjoy the flexibility to run your own travel agency business from anywhere.
Cruise Planners provides you with access to award – winning, innovative marketing; cutting – edge mobile technology; dynamic, hands – on training; lead – generating tools, as well as professional coaching and development.
- Initial investment: from $2,295
- Royalty Fees: 3%
Travel Leaders is changing the world’s idea of travel with a name that boldly embodies its commitment to the company’s vacation and business travel clients via a progressive approach toward each unique travel experience.
Travel Leaders offers potential franchisees effective business tools and strategies, including the unequalled Business Travel Management programs, that helped franchise members attract new business in excess of $100 million just last year.
The company’s all – inclusive toolbox includes templates and services for everything from prospecting to pricing, sales presentations, RFP responses and much more.
- Initial investment: from $2,270
- Royalty Fees: To $1,000 per month
Jazzercise offers you the chance to teach, motivate and inspire. You can share your passion for fitness and pass on the confidence and results you get from class. Every certified instructor is a Jazzercise franchisee. The level of investment you put into your Jazzercise franchise is up to you.
If you’ve dreamed of being your own boss, become an Owner Instructor. If you prefer to forego the bossy pants, teach for someone else and enjoy the perks of becoming an Associate Instructor.
- Initial investment: $3,700
- Royalty Fees: 20%
Whatever your situation, the most important thing to do is start. Research the franchise options out there in your area and find one that aligns with your vision and pocket. No matter what source you use to finance the down payment of your franchise, you should consult a franchise attorney and a certified public accountant first to confirm the tax consequences of the decision.