Budget franchises top for buyers

By Sarah Stowe | 08 Aug 2019 View comments

The results are in from the Inside Franchise Business online poll and it’s clear that budget buys are topping the franchise buyers’ shopping list.

Budget buys most popular

More than one third of respondents (34.63 per cent) can spend up to $50,000 on a franchise investment.

That’s good news for the mobile, home based and other low investment level franchise options in the market right now.

The next most popular spending bracket is $50,000 to $99,000, a price range that 18 per cent of respondents cite as in their budget.

Big spenders still keen

However there is appetite for the big spend too, with a respectable 15.12 per cent happy to shop in the more challenging price bracket of $500,000 and upwards where major retail, fast food and big gym brands operate.

About thirteen per cent (13.17 per cent) of respondents considering a franchise purchase are budgeting to spend between $200,000 to $350,000.

Least popular price categories as revealed by the poll, are $100,000 to $200,000 and $350,000 to $500,000 with 9.27 per cent and 9.76 per cent votes respectively.

The poll results align with the category searches conducted on Inside Franchise Business which show top shelf investments and budget buy categories are perennial favourites: fast food, coffee businesses, fitness, home-based or mobile opportunities lead the searches.

How to acquire a franchise buyer

So the challenges for franchise systems operating in the middle market are twofold.

Firstly the delivery of a clear and distinct brand message that sets a business apart from its competition.

Secondly the buyer’s access to and suitability for funding.

The greater focus on transparency, profitability and franchisee support that has developed over the last 18 months means savvy franchisors are taking action to gain wins on both fronts.

The recent announcement of the first 5-star rated franchise system (Quest Apartment Hotels) independently evaluated by FRANdata is an indication of the appetite for distinction in a crowded and somewhat dulled marketplace.

Tied to the evaluation conducted by FRANdata is the requirement for the franchise to be lender friendly. And that’s another step in the journey to getting more franchisees on board.

Franchise buyers, according to this poll, are seeking low-level investments. But they will be wanting a high level of reassurance that the business will deliver.

Brands that can provide evidence of their performance as franchisors will stand out.