Ten Ultra-Low Franchises
|American Poolplayers Assn.||$17,360|
|Kinderdance Int'l Inc.||$14,950|
|United Country Real Estate||$11,790|
With startup capital so hard to come by, it's no surprise that low-cost franchises are riding high in this year's Franchise 500ï¿½ .
There are 131 businesses in this year's ranking--more than 26 percent--that can be started for a total cost of $50,000 or less.
Collectively, those low-cost franchises added 3,461 new units from 2008 to 2009, making up more than 28 percent of the total franchise growth in this year's list.
Great. But, hey, we're in the age of haggling, so we went back and tried to do better.
The result is this list of top ultra-low-cost franchises: businesses that are ranked at or near the top of their individual categories and can be started for less than $20,000.
Almost all of them improved their ranking this year-- American Poolplayers Association and Kinderdance International shot up more than 70 places (which says something about the culture that we're not going to speculate on).
But there are some quirks to consider before franchising on the cheap. For one, franchisors generally offer different investment tiers, and the cheapest ones are often home-based or don't offer a strong support network, says Doug Schadle, CEO of Rhino 7 Franchise Development Corp. in Apex, N.C. Territory is likely to be unprotected, and even though the hours are flexible, the flip side is that unless you're extremely dedicated and skilled at sales, your investment will probably never yield a seven-figure paycheck.
"But you can make good money doing some of these things even part-time," Schadle says. "You have to do your due diligence first, but with that in place, you can roll over your 401(k) and start making money in a matter of weeks."
Cruise Planners/American Express , the cheapest startup on our list, costs $1,595 for those with industry expertise (newbies need to put down about $10,000). Typically, they're up and running within six weeks. By the third quarter of 2009, Cruise Planners/American Express added about 154 franchisees--after starting the year with just 725. "It's been a markedly better year for us," says Jason Mattes, the company's director of franchise development, partly because initial investments are small enough that people can finance with a few credit cards, and franchisees gain instant credibility. "We've been here 15 years and are American Express affiliates, so they benefit from a good reputation."
Jazzercise opened more than 930 franchises in 2009, took first place in the fitness franchise category and even has energy left to pump up its branding efforts. "Pricing has made the difference," says COO Sally Baldridge. "During the downturn, people see the value we provide. We've even had customers come in and say, 'I just lost my job, but I'm so thankful I still have Jazzercise, because now I can take more classes.' "