One of the newest trends in franchising has come about as a result of the economic downturn - with lending tighter than ever, business-minded individuals interested in opening a franchise opportunity are searching for low-cost systems that have the potential to make investors big bucks.

While some franchisees may believe the bigger the investment, the greater the return, many experts and experienced unit owners are proving this is not the case at all

"There is no correlation between the upfront cost of a franchise and what the owner can make," Mark Laughlin, former owner of three low-cost franchises - two of which he sold for more than $400,000 - told the website AllBusiness.com. "The most important element to your profitability is making sure you find a business model that fits your life and your personality, not just your business goals."

Still, turning $8,000 into $400,000 takes time, effort and some serious customer service efforts. Laughlin suggests that franchisees open their units with a strong desire to learn. For example, the website highlights one franchisee who kept her first job full-time while attending trade shows, trying out new marketing and advertising ideas and making a name for herself in the industry.

Franchisors can help their franchisees in this endeavor as well. Laughlin cautions new unit owners against trying to "reinvent the wheel," explaining that franchisors have already made the costly mistakes so that their franchisees won't have to. Rather, he suggests that owners stick to franchisors' plans to see success.

However, the key to franchisee success is not entirely dependent on the franchise plan. Unit owners need to look outside of themselves and make their customers the real focus. For the most part, Laughlin explains, customer service is a free way to spur revenues - it can be as simple as returning all phone calls and answering emails before day's end. Being courteous and conscientious can also do a lot to boost a local franchise's reputation.


A word to the wise, though: Just because a unit may be low cost doesn't mean franchisees can risk launching it without proper capital. Today's economic climate has made it difficult for small business owners to meet their funding needs, with more than half of franchisors reporting franchisees are not getting the necessary funds, data from the International Franchise Association reveals.

"Laughlin suggests you sit down and figure out what your household budget is," AllBusiness points out, "then have a plan in place to cover those costs without dipping into your working capital."

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