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

TruBlue Home Service Ally

Why TruBlue is the Ideal Franchise for Multi-Unit Owners: Scalable Growth With a Purpose

why-trublue-is-the-ideal-franchise-for-multi-unit-owners-scalable-growth-with-a-purpose

Onigilly Japanese Kitchen

Koji Kanematsu Turned a 2,000-Year-Old Japanese Staple Into One of the Most Scalable Restaurant Franchise Models

koji-kanematsu-turned-a-2000-year-old-japanese-staple-into-one-of-the-most-scalable-restaurant-franchise-models

Lindora

Celebrating the Nurse Behind the Mission: How Melinda Endricks Is Powering Lindora’s Growth and Impact Nationwide

celebrating-the-nurse-behind-the-mission-how-melinda-endricks-is-powering-lindoras-growth-and-impact-nationwide

Sola Salons

Sola Salons Targets Chicago for Strategic Franchise Growth

sola-salons-targets-chicago-for-strategic-franchise-growth

Melting Pot

Photo of Melting Pot white chocolate fondue

How Melting Pot Franchisees Drive Year-Round Success Through Strategic Promotions and Local Marketing

melting-pot-franchise-year-round-success

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 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

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands - 1851 Franchise

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands

doordash-acquistions-deliveroo-sevenrooms

Crumbl Franchise Investment - TSG Consumer Partners -  1851 Franchise

TSG Consumer Partners Takes Minority Stake in Crumbl, Signaling Franchise Growth Potential

crumbl-franchise-investment-tsg-consumer

Yum Brands Reports Strong Q1 Results with Big Boost from Taco Bell

yum-brands-reports-strong-q1-results-with-big-boost-from-taco-bell

QSR: McDonald’s Gains Momentum With Chicken Innovation, Value Deals and Franchisee Support

mcdonalds-franchise-recovery-chicken-strategy-value-deals-2025

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

Layoffs Surge to Pandemic-Era Highs, Opening Doors for Franchise Growth

layoffs-surge-to-pandemic-era-highs-opening-doors-for-franchise-growth

Restaurant Business: Crumbl Cools Its Expansion, Refocuses on Profitability

restaurant-business-crumbl-cools-its-expansion-refocuses-on-profitability

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchisee spotlight image with photo of Robert Trujillo and UWRG logo on blue background

How Robert Trujillo Expanded His Construction Business With UWRG

how-robert-trujillo-expanded-his-construction-business-with-uwrg

District Taco Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-district-tacos-franchise-costs-fees-profit-and-data

The Ultimate Guide to Selling Franchises: Building Your Brand’s Growth Machine

ultimate-guide-to-selling-franchises

How to Cut Down on Costs When Opening a Franchise Business

MORE STORIES LIKE THIS