1851

Whether you’re the franchisor or the franchisee, there’s no question that opening a business requires a significant investment, including infrastructure, employees, rent and legal fees. However, today there are also ways to cut down on costs when opening a franchise. And you don’t always have to think outside the box to do so.&nbsp;Where to Cut CostsWhen budgeting costs, there are a few areas of business that can be less costly today. For example,&nbsp;<a href="https://ca.linkedin.com/in/christiansaabcpg?trk=public_profile_browsemap&utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-cut-down-on-costs-when-opening-a-franchise-business-2722016" target="_blank" rel="nofollow">Christian Saab</a>, founder and CEO of&nbsp;<a href="https://1851franchise.com/cpgrecruitment">CPG</a>, noted that he has been able to cut costs by using AI software tools and virtual assistants where he can.&nbsp;“You'd be amazed by how much you can use a virtual model for,” he said. “I've been using virtual assistants and software tools to achieve more day in and day out. For example, these systems can be used for non-critical elements such as admin. This makes my model cheaper, which makes costs for our franchisees cheaper in turn.”&nbsp;Notably, an analysis by Boston Consulting Group found that AI can reduce conversion costs by&nbsp;<a href="https://www.inc.com/kelly-main/artificial-intelligence-efficiency-productivity.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-cut-down-on-costs-when-opening-a-franchise-business-2722016" target="_blank" rel="nofollow">up to 20%</a>, with about 70% of the cost reduction resulting from higher workforce productivity.&nbsp;Meanwhile, some of the biggest costs when franchising come from rent and employees, Saab noted. Home-based models that embrace a remote environment, such as CPG, keep costs low for franchisees.&nbsp;“Depending on where you are, rent could be an instant $10,000 a month—easily,” he said. “We’ve taken that away right off the bat. By eliminating that, and not making a brick-and-mortar location a requirement, that has made our franchises a lot cheaper.”&nbsp;Today, there are plenty of brands that are entirely on the go. Franchises that don’t require a physical location can be easy to operate, affordable to buy and provide more flexibility for franchise owners looking to increase their quality of life.Where&nbsp;Not to Cut Costs&nbsp;On the other hand, there are some areas of business that franchise owners should allocate more budget to. Saab says that one of those things is marketing. In fact, a study from the&nbsp;<a href="https://hbr.org/2020/08/dont-cut-your-marketing-budget-in-a-recession?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-cut-down-on-costs-when-opening-a-franchise-business-2722016" target="_blank" rel="nofollow">Harvard Business Review</a> found that companies that have bounced back the strongest from recessions usually did not cut their marketing spend and even increased it in many cases. However, they changed what they were spending their marketing budget on and when to reflect the new context in which they operated.&nbsp;Saab added that back office support operations are another area not to cut down on costs.&nbsp;“We spend a lot of time making sure we have the right way of delivering our standard operating procedures,” he said. “Get the tools that you need to get the job done.”&nbsp;He added that hiring in the head office is another place to spend money on.&nbsp;“If franchisees need support, hiring employees to your head office to do that is not something I would cut costs on. I would also recommend not cutting costs on your head office team. Pay your people well so that you can continue to grow your business.”&nbsp;

How to Cut Down on Costs When Opening a Franchise Business

1851 Franchise

In the franchise industry, there are certain areas you can spend a little less cash—and certain areas you should not.

how-to-cut-down-on-costs-when-opening-a-franchise-business

Children's Lighthouse

Why Franchisees Are Buying — and Expanding — with Children’s Lighthouse

why-franchisees-are-buying-and-expanding-with-childrens-lighthouse

Mosquito Squad

image of a mosquito squad franchisee visiting a site for bidding

Why More Families Are Saying Goodbye to Mosquitoes — and Hello to Mosquito Squad Plus

mosquito-squad-pest-control-consumer-benefits

image of mosquito squad franchise team in front of a nice home

Built To Outsmart the Buzz: Why Mosquito Squad Plus Is the Franchise Opportunity Pest Control Entrepreneurs Have Been Waiting For

mosquito-squad-franchise-opportunity

KidStrong Franchising, LLC

Why This Orangetheory Fitness Franchise Owner Decided To Invest in KidStrong

why-this-orangetheory-fitness-franchise-owner-decided-to-invest-in-kidstrong

Building Stronger Futures: How KidStrong’s Atlanta Footprint Is Sparking Transformational Growth

building-stronger-futures-how-kidstrongs-atlanta-footprint-is-sparking-transformational-growth

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

McDonald’s Rolls Out Major Value Push To Win Back Customers Amid Inflation

mcdonalds-rolls-out-major-value-push-to-win-back-customers-amid-inflation

Photo of Paris Baguette pastries and beverages 

Paris Baguette Celebrates 250th Café Opening in Frederick, Maryland, Accelerating Expansion and Reviving the Neighborhood Bakery Café

paris-baguette-250th-north-america-cafe

Restaurant Chains Open Their Wallets To Jump-Start Franchise Growth - 1851 Franchise

Restaurant Chains Open Their Wallets To Jump-Start Franchise Growth

restaurant-franchise-incentives-cash-royalty-holidays-fee-reductions

U.S. Budget Deficit Rises as Tariff Revenues Increase — Potential Considerations for Franchising

us-budget-deficit-rises-as-tariff-revenues-increase-potential-considerations-for-franchising

Dickey's Franchisee Backlash - Lawsuits - Disputes - 1851 Franchise

Texas-Based Dickey’s Barbecue Pit Grapples with Franchisee Backlash

dickeys-barbecue-pit-franchisee-lawsuits

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Rising Jobless Claims Could Signal Challenges — and Opportunities — for Franchising

rising-jobless-claims-affect-franchising

"Come in, We're OPEN" sign against abstract background

Small Business Optimism Dips, Raising Concerns for Franchise Owners

small-business-optimism-dips-raising-concerns-for-franchise-owners

Wendy's CEO Kirk Tanner Steps Down - Breaking News - 1851 Franchise

Wendy’s CEO Kirk Tanner Steps Down Amid Challenges, Leaving Franchisees Facing Uncertainty

wendys-ceo-transition-kirk-tanner-franchisee-uncertainty

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

How to Cut Down on Costs When Opening a Franchise Business

MORE STORIES LIKE THIS