New Report: Low Investment Franchise Opportunities Still the Most Popular

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Franchise Business Review Report Looks at Low-Cost Brands, Franchisee Satisfaction

Low-investment franchise brands may cost less than some of the big names in franchising but they have a significant presence in the market, according to a new report out today from Franchise Business Review.

“When people hear the word ‘franchise,’ it’s often the big food brands—McDonald’s, Dunkin Donuts, Papa John’s—that come to mind. But it’s the low-cost franchise opportunities—those with an average investment of less than $100,000—that are among the most popular and sought-after,” writes Franchise Business Review.

Franchise Business Review’s annual report—Low-Cost Franchises—looks at lower cost franchise opportunities and names the top companies based on franchisee satisfaction. It also looks at the types of businesses that fall under the low-cost umbrella, what franchisees can really expect from their investment, and what the pros and cons are to investing in a low-cost franchise.

To compile the report, researchers at Franchise Business Review looked at more than 130 low-cost franchise brands, interviewed CEOs and franchisees at some of the leading franchise brands, and surveyed 11,167 franchisees.

Franchisees were asked to rank their franchise systems in the areas of financial opportunity, training and support, leadership, operations and product development, core values (e.g., honesty and integrity of franchisor), general satisfaction, and the franchisee community. Franchisees also answered questions about their market area, demographics, business lifestyle, overall enjoyment running their franchise, and role in the franchisee community.

Using this survey data, Franchise Business Review identified the top low-investment franchise brands (those with above average franchisee satisfaction). Franchise Business Review does not charge a fee for its base survey or awards. Any franchise company with at least 10 operating franchisees can participate, and the companies listed in the report are based solely on franchisee satisfaction ratings.

“While the investment might be smaller, the low-cost segment is big in terms of the impact it has made on franchising,” said Franchise Business Review president Michelle Rowan. “In the past year, we’ve seen an increase in the number of businesses in the sector, the number of investors looking to buy, and the overall satisfaction of franchisees. With the right franchise brand, a low-cost business can be a great investment—even for investors with plenty of capital—because of the relatively low risk that comes along with owning one of these businesses.”

Franchise Business Review reports that, although the franchise industry as a whole has faced a difficult few years in terms of financing and accessing capital, the low-cost segment has not been as affected by the lending shortage as higher investment opportunities.

In general, the average franchisee satisfaction for low-cost companies is 8% higher than Franchise Business Review’s benchmark across all investment levels, and franchisee satisfaction within the companies dubbed Franchise Business Review’s “top low-cost franchises” is even higher—averaging 15% above the overall satisfaction benchmark.

About Franchise Business Review
Franchise Business Review is a national franchise market research firm that performs independent surveys of franchisee satisfaction and franchise buyer experiences. The firm’s services include commissioned franchise research projects, as well as industry-wide studies of franchisee satisfaction. Franchise Business Review is headquartered in Portsmouth, NH, and can be reached at (603) 433-2270.

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Molly Rowe
Franchise Business Review
(781) 254-3744
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