With more than 700,000 franchise owners in the country today, according to Zippia, it’s an exciting time to break into the franchise industry. Recently, mobile apps, artificial intelligence and contactless options are trending industries among franchisers, but there’s more to owning and running a franchise than following trends.
Franchising can be hard, and cash flow is an important factor in the success of your franchise. When deciding on a franchise to purchase, think about how your initial investment will set you and the business up for future success. For a lower entrance fee, consider buying one of the least costly franchises.
Here are the cheapest franchises to buy in 2023.
What are the cheapest franchises to buy?
If you are basing your decision on which franchise to open mainly on costs, it is important to have an idea of which ones have the cheapest point of entry. Keep in mind that, even after you open your business, you may have to pay an advertising fee, royalty fee or other recurring costs. Here are some of the cheapest franchises to start:
A cheap entry cost with a franchise doesn’t guarantee cheap operating costs. Make sure you’re aware of advertising, royalty and other fees before signing.
1. Cruise Planners
- Franchise fee: $10,995 or less, depending on experience
- Initial investment: $2,295-$23,617
- Royalty fee: 1.5-3 percent of gross commissionable fares
- Type of franchise: Travel
Cruise Planners may have less brand recognition than other franchises, but it certainly costs less to open. It ranks as one of the most affordable travel franchises in the industry. You’ll pay between $2,295 and $23,617 ― significantly less than a McDonald’s or Dunkin’ franchise ― to start your own Cruise Planners location.
- Franchise fee: $0, depending on experience
- Initial investment: Up to $35,000
- Royalty fee: 5-8 percent of gross volume
- Type of franchise: Print and promotional products
Proforma is a leading business-to-business (B2B) franchise within the $150 billion print and promotional products industry. Not only does the franchise fee and initial investment come in at a significantly lower price point than business-to-consumer franchises, but it also offers a 10 percent discount to veterans on their franchise fee. A massive benefit of a Proforma franchise: no large storefront or brick-and-mortar space is needed. Franchisees can operate from a home-based office environment and will learn information about the industry and products in the required franchise training.
3. Vanguard Cleaning Systems®
- Franchise fee: Fees vary by location
- Initial investment: $5,500-$36,600
- Royalty fee: 11.5 percent
- Type of franchise: Commercial cleaning
The janitorial services industry will reach a value of $50.1 billion by 2024, according to Statista. Vanguard Cleaning Systems offer a trusted and reliable brand backing. It has consistently ranked among the top franchises in Entrepreneur magazine’s annual Franchise 500 list — and franchisees can even finance part of Vanguard’s low initial investment.
4. United Country Real Estate
- Franchise fee: $8,000-$20,000
- Initial investment: $10,875-$50,380
- Royalty fee: 6-12 percent
- Type of franchise: Real estate
United Country Real Estate has an esteemed reputation in the real estate world. United Country Real Estate does not disclose its gross sales, which gives you less information to consider when deciding whether this brand is the right franchise for you. However, because it requires a total startup cost of between $10,875 and $50,380, you don’t have to spend much to join the United Country Real Estate family and enjoy a slice of its revenue.
5. Stratus Building Solutions
- Franchise fee: $3,600-$69,000
- Initial investment: $4,450-$79,750
- Royalty fee: 5 percent
- Type of franchise: Commercial cleaning
Opening a commercial cleaning company tends to involve an especially large number of equipment purchases. When you open a Stratus Building Solutions franchise, you eliminate most of this burden, and you can open your location fairly inexpensively. Expect to spend between $4,450 and $79,750 to open a Stratus Building Solutions location.
6. Anago Cleaning Systems
- Franchise fee: $4,590-$32,348
- Initial investment: $1,000-$21,000
- Royalty fee: 10 percent
- Type of franchise: Office and commercial cleaning
Like Stratus Building Solutions, Anago Cleaning Systems offers cleaning services. However, Anago focuses more on regularly scheduled office cleanings, whereas Stratus tends to perform one-off commercial cleaning jobs. Both franchises allow affordable entry into the cleaning industry. Anago has a long history of success and more than 1,500 franchises — with more than 50 outside the United States.
7. Town Money Saver
- Franchise fee: $0
- Initial investment: $5,700-$17,000
- Royalty fee: Varies
- Type of franchise: B2B advertising
Like Proforma, potential franchisees don’t need a storefront, inventory or employees required to start a Town Money Saver (TMS) franchise. Not to mention, TMS corporate handles accounting, graphic design, printing, mailing and digital services — so the franchiser can focus on building and cultivating customer relationships and growth.
8. Club Z! In-home Tutoring
- Franchise fee: $19,750
- Initial investment: $10,000-$15,000
- Royalty fee: N/A
- Type of franchise: Tutoring
As one of the largest-growing one-on-one home tutoring companies in the U.S., Club Z! offers national franchising opportunities for one of the lowest costs within the tutoring industry. The franchise does a lot for its franchisees to ensure success, including its proprietary Z! Tutor Match process that accurately matches the right tutor to each child, part-time or full-time ownership options and the ability to become a home-based operation rather than having a storefront.
>> Learn More: Tips for Building an Investor-Ready Franchise Business
Lesser-known brands tend to require less overhead, inventory and maintenance.
Here are three examples of name-brand franchises that demonstrate the difference in costs between lesser-known and well-known franchise brands.
- Franchise fee: $45,000
- Initial investment: $464,500-$2,306,500
- Royalty fee: 4 percent of gross sales
- Type of franchise: Restaurant
When you think of franchises, fast-food locations probably come to mind ― and McDonald’s is arguably one of the most famous restaurant franchises in the world. While expensive, McDonald’s franchises are popular with established entrepreneurs, as the company consistently stays in the list of the Top 10 Franchises in the World, according to Entrepreneur.
- Franchise fee: $40,000-$90,000
- Initial investment: $526,900-$1.78 million
- Royalty fee: 5.9 percent of gross sales
- Type of franchise: Restaurant
Dunkin’, which sells more than just doughnuts and coffee, is another brand people often associate with franchises. Opening a Dunkin’ location costs a bit less than a McDonald’s location, with the high end of initial investments dipping into the million-dollar mark. Dunkin’ offers both traditional and nontraditional franchising opportunities. Some of the nontraditional opportunities feature lower franchise and advertising fees. While the minimum net worth for the potential franchisee is the same ($500,000) for both opportunities, nontraditional may suit some entrepreneurs better.
3. Taco Bell
- Franchise fee: $25,000-$45,000
- Initial investment: $575,600-$3,370,100
- Royalty fee: 5.5 percent
- Type of franchise: Restaurant
Long the top pick for late-night cravings and tasty Tex-Mex, Taco Bell offers franchising opportunities for motivated entrepreneurs to take advantage of the restaurant chain’s 42 million weekly customers. It ranks, however, as one of the most expensive franchises on the market.
Of Taco Bell’s 7,000-plus restaurants around the world, 90 percent of them are franchised.
Franchises with low overhead, no storefront and few (or no) employees need much less to get started making money. Conversely, the more well-known franchise names — which are often restaurants or cafes — require much more startup because they require equipment, uniforms, additional training and other products. If the franchise needs to break ground on completely new real estate, that’s another huge cost. Construction of a hotel franchise or restaurant has considerably more overhead than a home- or small office-based cleaning service.
Another factor that makes well-known companies a more expensive franchise option is brand recognition. Lesser-known brands are eager to get their name out in different markets, whereas community staples like McDonald’s, Dunkin’ or Taco Bell can charge franchisees higher advertising and franchising fees.
What is the cheapest franchise to open?
Based purely on startup costs, the cheapest franchise to open is Town Money Savers.
However, when you also consider the potential for long-term profits, it becomes more complicated. Is it better to make a small upfront investment to launch a franchise location with modest profits or should you invest more to make a bigger profit over the long term?
What is the most profitable franchise to open?
Of the options mentioned, McDonald’s would probably allow you to bring in the most money ― with the average restaurant bringing in around $2.7 million in sales ― but that doesn’t mean it will be the most profitable for you, the franchisee, considering the high upfront investment required.
Of course, chances are, you don’t have millions of dollars lying around to make your initial investment. You also likely don’t want to search high and low for business loans and financing options that you’ll eventually have to pay back ― what if your new franchise location fails to turn a profit?
By this logic and our calculations, the most profitable franchise to open may be Cruise Planners. The company makes over $545 million annually, and you’ll pay somewhere between $2,295 and $23,617 for your initial investment. In addition, the luxury travel industry is expected to hit $1,574 billion by 2028, reports PR Newswire.
While the royalty fee for a Cruise Planner franchise is between 1.5 percent to 3 percent of gross commissionable fares — and not as high as some of the other franchises listed in the article. Cruise Planner franchises let you sell more than just cruises to maximize your imprint. With Cruise Planner, you can also sell land tours, all-inclusive resorts, hotels, travel insurance, rental cars and more.
If you have the passion to succeed in the travel industry, Cruise Planners may be your best option for opening a franchise location without breaking the bank.
The most profitable franchise to open may be Cruise Planners. It provides a low-cost franchise that offers some of the highest commissions in the travel industry.
What are the benefits of opening a business franchise?
Here are some of the benefits of opening a new location for a franchise business rather than building a new company.
Any small business owner will lament the startup costs and time burden of acquiring capital when launching a company. When you start your small business as part of a franchise, the franchise directs you toward certain types of machinery and equipment, so you won’t spend time comparing options. Some franchises can connect you with lenders for easier funding options too, so you won’t have to search high and low for business financing to cover your startup costs. [Related article: The Best Business Loan and Financing Options of 2023]
As a business owner, you have to develop logos, slogans and other marketing materials that make your company stand out to consumers. Not all business owners are thrilled at the prospect of the more creative side of business ownership, not to mention the expenses. When you open a franchise, you get to use the company’s established branding.
Worried that your new company won’t turn a profit? If your business has the logo and familiar layout, aesthetic and equipment of a widely recognized franchise, you should have significantly less trouble finding and retaining customers because they already know and trust the brand. And, of course, with more customers comes more revenue and, hopefully, profit.
Extra management and marketing help
In addition to its many storefronts, a franchise likely has a corporate office. This office houses employees who oversee marketing, management and training for all franchise locations, so when you need help on any of these fronts, you have built-in assistance.
Extra purchasing power
The cost of new inventory and supplies is often lower for a franchise. A franchisor may have larger collective buying power than an individual business, which can result in cost savings when buying large quantities of equipment or other materials. The money saved by using that purchasing power is often passed on to franchisees.
Max Freedman contributed to this article.