5 franchises you can start for under $20,000

Got a business goal but a bank account that won’t foot the bill? Turns out starting your own business isn’t as expensive as you may think, provided you make the conscious decision to invest wisely and perform a thorough due diligence process.

Franchising allows new business owners to generate sales from day one, leveraging brand value and increasing the ability to traverse the often confusing entrepreneur landscape.

That value does come at a cost however, with franchisees paying initial investment costs and ongoing fees for use of a brand’s intellectual property, marketing material and support structures.

The costs can vary greatly from model to model, particularly among global and well-established brands, but scratch the surface and you’ll find some highly profitable business opportunities that don’t require a massive amount of capital.

Here’s five franchises that you can start for under $20,000.

1. Maggie Moo Music

Interactive children’s franchise, Maggie Moo Music provides regular music sessions for kids aged five-years-old or younger, with a focus on positive development and education.

The format is the perfect stepping stone for children prior to school, as the regular class time and interaction with other children prepares them for the next stage of their development.

For an investment of up to $20,000, franchisees are granted an exclusive territory with the model tailored to their specific needs and business goals.

There is no marketing levy and all royalty payments boil down to a fixed low-cost monthly fee of just $130 providing structure and consistency for partners.

2. Resolve Finance

In just over one year of franchise operation, Resolve Finance has attracted a number of high-profile franchise partners, due to its low investment costs and career progression opportunities.

For just $20,000, franchisees with a background in finance can launch their own Resolve Finance mortgage broking outlet, working remotely or through shared work spaces.

Foundation franchisee, Michael Johnston began his career with Resolve Finance as a client support officer, before progressing to become a fully-qualified mortgage broker.

“I have taken on many roles within the Resolve Finance business, starting in admin support and then progressing into loan writing, broking, management and now a franchise owner,” Johnston said.

“Through each of these roles I have been able to learn, develop and refine my craft to give me the comfort to make the unknown leap into owning a business.”

Prospective franchisees also receive extensive support for Resolve Finance head office, including access to online support, mentoring groups, a call centre and an invitation to join the Franchise Advisory Council.

3. Fox Mowing

Outdoor landscaping and handyman business, Fox Mowing has taken a bite out of the Jim’s empire, building a healthy network of profitable franchisees, and there’s a reason why.

For an initial investment of $16,000, franchisees have access to brand’s national and local area marketing and support structures.

While it is the responsibility of the franchisee to purchase the trailer and equipment needed to operate (approximately $9000), the Fox Mowing model promotes profitability in a number of other ways.

Unlike the majority of franchise models, Fox Mowing franchisees do not have to pay an ongoing royalty fee, opting instead for a flat $125 per week franchise fee.

One of the fastest growing franchise models in the mobile sector, Fox Mowing achieved a 20 per cent unit growth in 2018, bringing the total number of units in the network to 125.

4. Dixon Homes

Since launching in 1959, Dixon Homes has established itself as a leader in the home building industry, providing a platform for experienced builders to launch their own business.

Franchisees with Dixon Homes have access to over 25,000 home designs, fully priced, allowing for streamlined consultations and quoting, boosting profitability and improving work/life balance.

An opportunity with the Aussie home builder starts from $20,000 plus GST, with a monthly maintenance fee of around $350, with all territories exclusive.

All franchisees must be licenced builders with a growth mindset and a willingness to learn.

5. Kumon

Global tutoring business Kumon is one of the most successful franchises worldwide, with many franchise partners reaping the rewards of its low-cost model.

At just $4000 to $11,000 for mobile tutors, and between $8000 and $30,000 for those leasing venues, Kumon has carved out a reputation as an affordable and profitable early learning venture.

The brand was launched over 50 years ago and has since helped more than four million students achieve greater results in literacy and numeracy.

While not a requirement, prospective franchisees with a background in education are best suited to this model, however all Kumon franchise partners must have obtained a university degree.

A staple across the global network is the $1000 royalty fee, making it one of the most affordable education franchise models in the industry.

Royalty fees are paid through enrolments and tutoring, including 50 per cent of income from one-off enrolment fees and 45 per cent of income from monthly tuition fees during provisional licence, however this rate drops to 40 per cent upon completion of full licence.

Despite a lengthy worldwide heritage, Kumon is continuing to grow rapidly in Australia, in 2018 online, the brand achieved a domestic growth rate of five per cent.

Final thoughts

While some franchise opportunities may present low initial fee structures, as well as reduced marketing levy and royalty fees, it is important to remember that due diligence is an expense that must be factored in.

It is imperative that all prospective franchisees consultant a franchise specific lawyer and accountant to assess a potential business opportunity.

These services can be costly, but will ultimately save you time, money and heartache in the future.