How to Choose a Low-Cost, High-Return Franchise

Any rational potential franchise owner knows to research the systems that they can invest in at a low cost while still coming out with high net revenue. That’s because, a focus on a quick return on investment is often the key to success at first glance.

But no matter how much due diligence is done, or how many franchise consultants you’ve listened to dole out advice, there is one important component to the equation when it comes to selecting the right franchise to fit your needs: Happiness.

Steve Beagelman, founder of SMB Franchise Advisors, believes that happiness outweighs any monetary factor in franchise system selection, especially in the long run.

“There is no silver bullet,” Beagelman said. “People want happiness, even those who mainly concerned about return on investment—that’s important, but quality of life is also important.”

Some of the more concrete features of a low-cost, high-return franchise that often come to mind for potential buyers are elements like recurring revenue—think membership-based concepts like WORKOUT ANYTIME or Hand & Stone Massage and Facial Spa. Many people also focus on segments in the industry that don’t require a store-front in order to save capital, like The Cleaning Authority or Right at Home*.

Beagelman suggests that you ask yourself three primary questions when considering buying a franchise: Do I like the concept? Do I like the people? Is there a territory available in a place where I want to live?

After considering the answers to those three questions, Beagelman recommends to then focus on the return on investment that the company will provide. But be wary—if the answer to the first three questions isn’t “yes,” that return on investment won’t carry much weight, and it’s probably best to take three steps back and start over.

“For example, I’m not a car guy,” Beagelman said. “If someone told me that I could make all of the money in the world working for a brand like Jiffy Lube, it wouldn’t really matter to me— I’d be miserable doing that.”

Ultimately, the three questions addressing who, what and where reinforce an emphasis on personal happiness and quality of life.