Is it possible to open a profitable franchise with no deposit?

Is het mogelijk om een winstgevende franchise te openen zonder aanbetaling?

Because it’s sometimes difficult to put your hand in your pocket, there are solutions for starting up a franchise with very little share capital.

The choice of franchising offers many advantages for entrepreneurs who want to be supported and benefit from a reputation that will guarantee the success of their business. But benefiting from the know-how of a reputable franchisor doesn’t come free.

In fact, almost all franchises require an entrance fee of varying amounts. This means you have to pay an amount set by the franchisor to be able to use its brand, which varies according to the brand, the business sector, the franchisee’s experience and the sales outlet’s location. The initial costs of some franchises are more affordable than others. For example, a Fnac store costs around €15,000, while a McDonald’s restaurant costs €45,000.

So how do you open a franchise when your savings don’t allow you to make a sufficient personal contribution and pay the entry fee? There are solutions for topping up your capital on the one hand, and joining a brand at a lower cost on the other.

As you can see, you’ll need a minimum personal contribution to open your own outlet. Even if the entrance fee was free, there are still initial investments to be made, such as the purchase of raw materials, as well as fitting-out costs and administrative expenses. In 2020, a survey conducted by Banque Populaire in partnership with the French Franchise Federation and Kantar shows that the total cost of setting up a business exceeds €200,000 for 42% of applicants. Without funds, banks won’t grant you a loan, as you must have at least 30% of the amount requested.

So how do you finance a down payment from scratch? Here are a few solutions:

  • Love money: This is an investment made by the project owner’s friends and family. Those who finance your project become partners and benefit from certain advantages, such as tax relief.
  • Crowdfunding : This is a fund-raising activity organized on a dedicated digital platform where any individual can invest in a project in the form of a donation or loan. Ulule is just one example of a crowdfunding platform.
  • The honor loan: This is a zero-interest personal loan with no collateral required. The beneficiary undertakes on his or her honor to repay the loan over a period determined by the lender. The two main associations granting this type of loan to entrepreneurs are Réseau Entreprendre and Initiative France.
  • Micro-credit: As the name suggests, this is a small loan not exceeding €10,000. In particular, this solution can help cover the first expenses when starting up a business. You can apply to a bank approved by the Fonds de Cohésion Sociale.
  • Business start-up assistance for women and people with disabilities: Pay inequalities and persistent clichés are further obstacles to obtaining credit. To break this glass ceiling, there are specific aids such as Garantie ÉGALITÉ Femmes or AGEPI for single mothers.

With these solutions, you should be able to build up a small amount of capital, which you can eventually supplement by applying for a loan. But if you still don’t have enough money, you should know that it is possible toopen a point of sale at a lower cost, but only in certain areas.

A number of real estate brands offer a free entry fee, including agent networks such as IAD France, Team France Immobilier and SAFTI. Those in the personal or business services sector are also low-cost franchises, as they don’t need employees or premises to operate. Last but not least, there are all the activities that can be carried out from home, and which require virtually no input.

But be careful! Just because a retailer doesn’t charge an entry fee doesn’t necessarily mean you’ll save money. Some of them may charge a substantial fee. So make sure you do your homework before making an appointment with a franchisor.

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