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What is a Franchise?
Franchising refers to a method of business expansion, where the owner of a business will license out the business model to a third part, for them to run the business in their own area. The business owner is referred to as the franchisor, whilst the third part investing in the rights to trade is known as a franchisee.
Franchising enables the third party - the franchisee - to run a business of their own, whilst trading under the name of a successful brand. Many franchises can be invested in from less than £5,000 of your own money.
What will I get when I invest in a Franchise?
Investing in a franchise that costs less than £5,000 will grant you access to the business model and most (if not all) of the starting stock or equipment to get the business off the ground.
There are many franchises for sale under £5,000. Some such good examples are home based franchises. Because home based franchises require only a laptop and phone, overheads are often pretty low, so too are the equipment and stock costs. Vending franchises are another top type of low cost franchise under £5,000. Many vending tower businesses enable the franchisee to scale their business, starting off small and growing it to their ambitions.
Are Franchises Under £5,000 Profitable?
The cost of the franchise will in most cases be directly proportional with what you're getting in return for your investment. A franchise under £5k will, as you'd expect, have a small launch package compared to counterparts with an extra zero in their figure. However that isn't to say the business isn't profitable. Regardless of the investment, if a franchise network is trading, it is therefore clearly successful. It is up to the franchisee as to whether their business within that franchise is a success. The more effort you put in, the more successful, the more profitable the business will be.
A franchise which costs under £5,000 may not necessarily require that figure in your own funds. Many banks and lenders favour franchising as a more secure route to business ownership and are often able to lend more than half the investment - often up to 70%.