Are Low-Cost Franchises Worth the Money?

By CHRIS POWILLS Entrepreneurs everywhere have been purchasing franchises that they can continue to grow. However, while looking for a franchise, these entrepreneurs have to research many different options. There are many levels of initial investment for a franchise business, but more often than not these prospective franchisees do not have the funds to open empire brand units such as McDonalds. Instead, the prospective business owners turn toward brands that have lower start-up fees in hopes of making enough money to continue their own expansion. The math seems simple. A lower investment means a smaller budget. With a smaller budget, franchisees have the potential of growing more units at a lower cost. While this equation seems like a money maker, it is not as simple as it seems. “From a downside, what we are lacking that a franchise system such as McDonalds has is that those franchisees usually own their real-estate,” said Kyle Palmer, a multi-unit franchisee for Wireless Zone in the Minneapolis area. “We dump a lot of money on rent.” Wireless Zone, the largest wireless retail franchisor, has a start-up fee of $100,000, making the concept one of the less-expensive franchises to start. Palmer and partner Matt Funk opened their first unit in 2008 and have since grown to a total of six units. When looking for a franchise to open, Palmer says, “do your research and understand that you are not going to make money in the first months of starting your business. You have to go all in when opening a business.” Palmer and Funk both worked in a Verizon retailer before pursuing a career in business ownership. Since they already understood the product that they were selling, they decided to look into franchising with Wireless Zone. Today, the partners have continued growing since purchasing their first Wireless Zone unit in 2009 and plan on opening another 10 units. Can lower start-up fee franchise investments be turned into a money making machine? Like Palmer said, you have to go all in and do your research. Coming from multi-unit experts, these are the essential parts to the equation that can turn a lower start-up fee investment into a lifetime of success.