What is the Cheapest Franchise to Buy?

In the world of franchising, some of the biggest names often also come with the heftiest price tags. A McDonald’s franchise costs between $1.3 million and $2.3 million to open, for example, and a Dunkin’ franchise can cost as much as $1,597,000. On average, startup costs come in at about $50,000 to $200,000, according to Franchising.com, and average royalty fees paid by franchisees range from 3% to 6% of monthly gross sales.

So, what is the cheapest franchise an entrepreneur can invest in if they want to take control of their destiny on a budget? Well, that depends on a few factors, but one name that pops up on nearly every “cheapest franchises to buy” list is Dream Vacations, the home-based travel agency franchise.

“Many people think you need hundreds of thousands of dollars to buy a franchise business, but the reality is that there are some great low-cost franchises that can provide a very high return on your investment in the long run,” Eric Stites, CEO and managing director of the Franchise Business Review, told CNBC.

Dream Vacation’s initial investment can be as low as $1,795, with a franchise fee of between $495 and $10,500, depending on the level of expertise of the owner. Certain entrepreneurs can take even more off of that price tag, with the Dream Vacations franchise offering discounts for military members and community heroes. 

The Dream Vacations concept is able to maintain low overhead and no inventory since the business can be run out of the franchisee’s own home. While there are plenty of home-based franchises out there, Dream Vacations may be the cheapest of them all, and puts owners in a unique position to do their work from anywhere in the world, as long as they have an internet connection and a laptop. 

Started in 1991, the home-based travel agency specializes in both land and cruise vacations and includes more than 1,200 franchisees, who earn commission on the sales of vacation packages from tours across Europe to Caribbean cruises and luxury resorts across the globe.

Of course, for an investment that is significantly lower than competitors, Dream Vacations franchisees should also expect potentially lower returns. The average annual pay for a Dream Vacations in the United States is $60,317 a year, according to Ziprecruiter, compared to the average annual pre-tax income of $80,000 for all franchise owners in America, according to Franchise Business Review. 

While the low initial investment for a Dream Vacations franchise does include marketing support and training, franchisees do need to obtain a travel agent license or certificate on their own. It is also important to note that travel agents who own their own franchise through Dream Vacations are paid only through commissions; there is no annual salary or hourly rate. Once the business is going, Dream Vacations royalty fees come in between 1.5% and 3% of annual commissionable sales.

And the amount of commissionable sales franchisees are bringing in seem to vary widely across the Dreams Vacations system. According to Item 19 in its Financial Disclosure Document, the brand’s top group of franchisees (representing 5% of the network) had average sales of $2.2 million in travel in 2018. The lowest group, which represented 38% of all agents, had average sales of only $42,563.  Average annual sales were $336,971 in 2019, according to CNBC.