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

HomeTeam Inspection Service

Good Day Columbus: Home Insurance Expert Reveals Why Central Ohio Premiums Are Rising and How to Combat Costs

rising-home-insurance-costs-ohio

CapitalSpring

Primetime Fitness Expands Crunch Portfolio With CapitalSpring’s Backing

primetime-fitness-expands-crunch-portfolio-with-capitalsprings-backing

Children's Lighthouse

How Children’s Lighthouse Franchisees Scale to Multiple Locations

how-childrens-lighthouse-franchisees-scale-to-multiple-locations

Express Employment Professionals

Betting on Himself: How Chris Brown Built an Express Employment Professionals Franchise From the Ground Up

betting-on-himself-how-chris-brown-built-an-express-employment-professionals-franchise-from-the-ground-up

Comfort Keepers

Comfort Keepers® Named One of America’s Best Home-Care Providers

comfort-keepers-named-one-of-americas-best-home-care-providers

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

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

"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

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

ricki-oberoi-laynes-chicken-fingers-growth

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

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

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

part-time-franchises-picking-the-right-model

1851 Franchise Deep Dive graphic with Sparkle Squad logo

Sparkle Squad Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-sparkle-squad-franchise-costs-fees-profit-and-data

Design with school-aged child standing on pencil with text "Education Franchises" and "<$500K"

Top Education Franchises Under $500K To Explore in 2025

top-education-franchises-under-500k

How to Cut Down on Costs When Opening a Franchise Business

MORE STORIES LIKE THIS