Franchisee satisfaction with low-investment franchises is 8 percent higher than higher-priced opportunities, according to new findings out this week from Franchise Business Review.
Franchise Business Review’s annual report—Top Low-Cost Franchises—looks at franchisee satisfaction at concepts requiring an average overall investment of less than $100,000 and compares that with Franchise Business Review’s data for brands costing $100,000-plus. The report also names the top 100 low-cost opportunities for 2013, and examines 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.
“Although the word ‘franchise’ usually brings to mind big, expensive businesses like restaurants and retail stores, there are hundreds of lower-cost opportunities available,” writes Franchise Business Review. “Without the overhead of pricey real estate, expensive equipment, or large product inventories, this niche group of franchises can be just as profitable as their higher cost counterparts.”
To compile the report, researchers at Franchise Business Review looked at more than 145 low-cost franchises, interviewed CEOs and franchisees at many of the leading brands, and surveyed more than 11,000 franchisees.
Franchisees were asked to rank their franchise system 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 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.
“We typically see higher satisfaction in our low-cost concepts, and this year was no different,” says Michelle Rowan, president of Franchise Business Review. “Low-cost franchisees rated their systems higher in every category of our survey, and while the overall satisfaction of all low-cost franchisees we surveyed was higher than we see in opportunities costing more than $100,000, the overall satisfaction of our Top 100 low-cost brands was even higher—14 percent.”
Franchise Business Review saw the most significant difference in the area of Training & Support, where franchisees of low-cost concepts ranked their franchisors 12 percent higher. Included in the category of Training & Support are questions about a brand’s marketing and technology, so the high satisfaction in this area may prove low-cost doesn’t necessarily mean fewer resources available from the franchisor. The highest rated categories were Core Values (of the franchisor) and Franchisee Community.