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Discover the advantages of opening a low-cost franchise

Discover the advantages of opening a low-cost franchise

Published in Expansión , 02 - December , 2016 abogados franquicias Overview franchises

The low cost brands allow young entrepreneurs to enter the corporate world without having to make a big payout and make their business profitable.
Every time Gregorio Pozo walked through Arganzuela, he noticed the posters hanging on the balconies of the Madrid neighborhood, where the same legend always appeared: It is sold. It was 2012, the time after the outbreak of the great economic crisis in which, as five years earlier, it happened to him with his real estate company in Seville, many companies in the sector had to close the closure. "The market for buying and selling apartments was dead, so I decided to ask for a leave of absence in my job as an insurance commercial and to open my own rental business," says Pozo. Thus begins his relationship as a franchisee in Solo Rentals, with an initial investment of 4,000 euros, in a small place with a location that is not easily accessible. "It was not necessary for a lot of people to pass through the store: we managed on the telephone the relations between owners and tenants, so it was not necessary to adapt the premises too much to give a good service to our customers," explains the franchisee.
Like Pozo, who could not afford to make a high outlay to open their business, some entrepreneurs opt for franchises that do not demand a high initial investment. This is possible because the company's activity is performed by the franchisee offering a service that can do from home or because the activity only requires simple locations where to distribute the products to their customers.

• Particularities: "Low cost franchises are those in which the total cost of implementation, adding the entrance fee, bond and the adequacy of the premises, with furniture, computers and other objects that are necessary to start up the business , Is less than 20,000 euros, "explains Juan Gutiérrez, Session Consul partner. However, this amount must be independent of the other agreements to which the franchisee is subjected, such as the different royalties, to ensure a quality service to the client and a stable relationship with the franchise. "An initial low amount, generally, allows to recover the investment and that the business is profitable in a short time. Therefore, the exclusive contracts that the entrepreneur signs with the brand have a small duration, between three and five years" , Explains Gutiérrez.
• Profile: "Franchisees with low economic solvency tend to be young people with a desire to undertake or unemployed at middle age. They know that it is difficult to re-enter the labor market and open their business with severance pay," says Susana Fernández, a partner Director of Centro Franquicias. Precisely, because of the management of very tight capital, it is essential to carry out a more exhaustive examination of the surprises that the market may face and cost them an economic displeasure. "You have to get right with the profitability of the business, analyzing the fixed expenses, such as contract insurance or the IBI, and the variables, such as raw material or shipping costs, that have to face," adds Fernandez.
• Type of place: Depending on whether it is a franchise of distribution or services, the place that best suits its characteristics will be chosen. "A kiosk in a mall is an option for stores that offer only an exclusive part of their stock in these sales points, the commercial islands," says Santiago Barbadillo, founder of Barbadillo and Associates. "On the other hand, a business that offers a service for families who want to find tutoring for their children will only need computer software that puts the two parties in contact," he concludes.

Succeeding in the fashion sector
In 2002, Sandra Carmona begins her foray into the fashion sector. From clerk in a clothing store in Cordoba happens to be responsible for window dressing throughout Andalusia for a well-known fashion brand. The economic crisis pushed her to take advantage of the ERE that made her company in 2011, a period that took advantage of training in commerce and marketing. "After completing my studies, I wanted to run my own business and set up a Dandara store. I chose it because of the quality of its garments, all made in Spain, and because it offered large sizes with a style designed for urban women and fashion" , Says Carmona. It was 2014 and needed about 15,000 euros of initial investment to make his dream come true, money he had saved from his previous experience in the sector. "The store is located in the center of Cordoba, in a street known as 'the street of the bride', so it is the ideal location," says Carmona, who is very active in social networks to advertise his business. "My relationship with the franchise has been good since the beginning, and now they even let me carry out other activities, such as making headdresses in my store," the franchisee proudly concludes.
Analyze the best option when investing
Becoming a franchisee, as in any type of business, is a risk. In the case of low investment franchises will be lower, since not to succeed the loss will be the time spent and little money. However, in order to reduce risks it is important to make good decisions before investing:
Knowing the business model: It is not the same to sell clothes complements in a mall that offer services of marketing online from home. Depending on the capabilities of each franchisee you have to opt for one or another business. You should keep in mind that you will spend a lot of time working for your franchise, so it is important that you enjoy the activities you do in your company.
Study the franchises: All companies will try to seduce the entrepreneur to open their business with them. This is why it is important to analyze issues such as the existence of postcontractual clauses that, when the franchise is abandoned, do not prevent the business from operating under its own brand with the clientele that had previously consolidated.
Adapt to different audiences: That a franchise is considered low cost does not imply that it offers low quality products or services. What's more, it can be located on an island of a commercial center in which it sells perfumes of famous firms. Therefore, the franchisee will deal with public of different social profile.
Location costs: Although opening an island in a shopping center may be attractive because of the large influx of people that will pass through its 'booth', you must keep in mind that this location forces you to operate at the same times as the center: that is , Work almost twelve hours a day and weekends. The usual is to hire an employee, which will increase your expenses.
Expectations: When operating with a reduced investment tends to have low expectations of economic profitability. In this sense, the benefit forecast must be made based on what is going to be invested.

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