Franchise without investment or how to start a franchise business without initial investment

The realization of the desire to start a profitable business without financial investments is possible through the use of franchising according to a certain system that does not require the payment of a lump-sum fee or provides for the supply of goods for sale.

Franchising allows you to organize a business according to a proven, time-tested, profitable scheme. The franchisor company transfers development technology, tested methods, accumulated knowledge, and work recommendations to the junior franchisee partner. As a result, the franchisee reduces risks, minimizes wasted time, reduces the cost of expenses, and quickly reaches the target audience. And the franchisor popularizes the brand, expands the network, and increases profitability without financial investments.

Types of franchising without investment in Russia

No lump sum payment. The right to use a well-known trademark is paid for in a lump sum, the cost of which is stipulated in the franchise agreement. In some cases, the entrepreneur is exempt from the need to make a payment for joining the network of the parent company.
Attracting an investor. If you can’t cancel the lump sum payment, you can find an investor and present a detailed business plan. It is advisable to calculate the worst and best scenario for the development of cooperation. A guarantee of an increase in invested funds can interest an investor.
Active sales franchise. Frequent offer on the service market: travel agencies, beauty salons. Requires personal selling skills, no need to purchase assets, franchise cost is minimal.
Goods for sale or in installments. In Russia, the method is widespread in the retail sector. The franchisor does not require advance payment for the supplied products. The franchisee sells the product, gives the proceeds to the parent company, retaining an agreed percentage of the income. In the second case, the purchase price of products is paid in installments with a deferment. In such schemes, the franchise price is often included in the cost of goods.
Network marketing. Companies that sell products from large, popular brands often become the starting point for new businesses. Network marketing develops personal qualities. Which will later come in handy in business negotiations. This option as a launch site is suitable for an entrepreneur who has developed an organizational business strategy, but has not accumulated financial resources. He will gain entrepreneurial experience, learn to weigh risks, increase self-esteem, and earn start-up capital.

Read also: Franchises for small businesses

Is business without investment possible?

There is no successful company that would take your company under its wing, completely free of charge. Still, the concept of “free franchise” has a right to exist.

Free franchise – transfer of rights to use the company’s brand and know-how without a lump sum fee. But this does not mean that opening such a business does not involve costs. The franchisor will include strict conditions in the contract, and it will be very difficult to fulfill them. Analyze, forecast, research - this is what a novice businessman must learn first.

How to open a franchise business without investment

The region of Russia in which the franchise will be promoted is selected and approved. Next, the candidacy of the entrepreneur – a possible franchisee – is assessed. Having high income and own real estate are not a decisive factor in the issue of granting a franchise without investment. You should understand the philosophy of the brand, be able to negotiate, entrepreneurial experience and a management career are welcome. An agreement is concluded under which the franchisee becomes the director of the entrusted division. The businessman is given trademarks, a brand book, management techniques, and a marketing company is launched. The role of the franchisee is to become the engine of development of the company in the region of Russia entrusted to him. After the return of investment from the parent company, the businessman receives the right to manage the division. Responsibilities of the entrepreneur:

searching for a sales site and production premises that meet the franchisor’s requirements;
renovation and decoration of premises in the company's corporate style;
collection of title documents, permits, certificates, passing inspections;
hiring personnel in accordance with instructions received from the franchisor;
achieving positive financial results, maintaining performance indicators;
making a profit, reaching the break-even point.

How to choose a franchise

Each market area offers profitable franchising, requiring minimal start-up capital. All that remains is to assess the financial risks, pitfalls, and take into account the specifics of the region where you plan to do business. If the franchise price is too low, perhaps the franchising agreement stipulates unreasonably high royalties, advertising, and marketing payments - you need to carefully study the financial terms of cooperation with the franchisor. The profitability of a business also greatly depends on the size of the trade margin and commodity turnover.

Pros and cons of franchising without investment

The clear advantages of buying a franchise without investment are overshadowed by unpleasant negative aspects. In Russia, there are cases of fraud when a franchise seller deliberately puts a partner into debt and seizes his property. Safety net: enter into a franchise agreement in the presence of your own lawyer.

There is a lot of competition in the Russian market in the field of franchises without investment. Low financial risks, favorable terms of cooperation, and easy entry into business attract many entrepreneurs.

There are no franchises that do not require financial investment at all. You will have to invest in finishing the premises, purchasing office supplies, household goods, possibly buying cash register and retail equipment, paying tax and administrative fees.

The absence of a lump sum fee and exemption from royalty payments removes the responsibility from the main company in terms of the franchisee reaching a high level of profitability. By and large, the franchisor is not financially interested in increasing the income level of the junior partner.

Franchise from scratch without investment

For a franchise without investment to be truly in demand, that is, for the network to develop, it is necessary for its creator (franchisor) to take into account the four main “don’ts.”

You cannot name a franchise without investment just to attract the attention of a potential buyer. If there are costs, they must be stated honestly.
You cannot make hidden payments, for example, by unreasonably inflating the purchase price of a product for the franchisee. That is, other wholesalers have a lower price for this or a similar product.
Payments cannot be manipulated. Sometimes franchisors indicate that the entrance fee for a franchise without investments is zero and royalties do not need to be paid monthly, but at the same time they charge a monthly advertising payment that exceeds all allowable amounts.
And finally, franchise buyers without investments should not be considered fools. Firstly, they can analyze everything on their own and understand that the balance is not “dancing.” Secondly, if they cannot do this themselves, then they can turn to franchise brokers for help, who will instantly distinguish a franchise without investments from a fake franchise.

The main advice when choosing a franchise without investments is to count, count and count again. Only in this case will you understand how profitable the offer the franchisor is making you is.

By the way, we often recommend that franchisors still charge a lump-sum fee, and not equate it to zero, since tomorrow it is with this money that the network will develop. After all, to work with franchisees, you need franchise managers, a launch team, time is wasted on negotiations, etc. The costs of maintaining communications with franchisees can be ignored if there are two or three of them, and if there are two or three hundred, then entire departments need to be maintained.

Russian companies offering franchises without investment

Red cube - gift shop. The company invests in opening a sales point: develops a design, renovates the area, purchases equipment, selects and trains personnel, and supplies goods.
eCoswey is a chain of supermarkets developing using the “store without investment” method. The company takes on financial issues related to the launch of a new sales platform (utility payments, provision of goods, finishing of the premises).

Can't decide? Then we choose: Franchise for the sale of goods

Also, many city Internet portals use cooperation without investment from franchisees in order to expand influence in their region.

Popularity, number of offers on the market

Offers from franchisors with a promising “no investment” are very numerous, but it is worth understanding that it is unlikely to be possible to do without financial investments. Well, think about who will offer their popular brand, or rather the right to work under it, will give a scheme for launching a new point and will do their best to help development, if they do not receive financial gratitude for this. The logical answer is that no one, in any case, there is a benefit for the franchisor in such cooperation.

Important ! If the franchisor says that he does not require a lump sum payment of regular royalty payments, this does not mean that he will not have to invest anything. Often, such a franchise agreement without investments implies the mandatory purchase of a certain, previously agreed upon volume of goods produced by the franchisor.

This business offer is quite profitable, because you can save on payments required for other franchises, but not always. Sometimes franchisors resort to tricks, declaring that the franchise is “without investment.” Yes, there will be no lump sum fee and no royalties. But the first payment can be disguised as a fee for training the franchisee, and the second is already included in the form of a markup in each purchased product, so when you find such an offer, you should carefully study whether it is really so profitable.

It is worth understanding that starting such a business is not very easy in the sense that many risks await those who want to “not get their feet wet and catch a fish,” among the most common problems:

Lots of fraudulent schemes. The terms of the contract are sometimes so specific. It is impossible to call this type of business one that does not require investments. For example, in some agreements there are clauses that the business premises must be owned or purchased immediately after signing the franchise agreement. This is definitely not an advantageous offer, but a deception, therefore, before signing any agreement, you should show the agreement to an experienced lawyer.
Competition. Although there are real offers of this kind, there are not enough of them for everyone, which means that for each contract there will be a real struggle between potential franchisees.
Agreements may contain deliberately unfavorable conditions for franchisees. For example, too large quantities of goods purchased that objectively will not have time to be sold. In order to avoid getting into such a situation, you should carefully monitor the market and study the contract.

Important ! Before agreeing to a franchise for a small business without investment, you should determine what benefit the franchisor receives; it should be obvious. If this is not the case, then surprises may arise along the way of starting a project or its operation.

What types and types of franchises are most often without investment?

Not every franchisor is ready to offer their franchise without requiring initial and ongoing payments. There are specific types and types that can work this way.

Most often, these are product franchises, and if the franchisor in one person is also the manufacturer of the goods sold through the network.

Most often, such product franchises relate to the sale of:

Clothes.
Shoes.
Food products. In this case, the franchisor is often a large group of companies, and the goods sold by its franchisees are manufactured to the franchisor’s order.
Jewelry.
Furniture, items for sleeping.

The chain's stores have a common style and interior design; they are recognizable. There are standards regarding the occupied retail space, store placement, and other important points that allow TT to be identified as a store of a well-known chain.

Grocery stores, more often supermarkets, operating as franchises without an initial payment and royalties often operate under a reverse franchising scheme. This means that they do not require an initial payment or royalties, and even often independently select premises, train staff and other key points for launching a project. The franchisee in such a store no longer works as an individual entrepreneur, but as a manager. All proceeds are transferred to the parent company, which then transfers a certain percentage (15-25%) as an agency fee.

A franchise that offers a product and a name, in addition to the product itself, the franchisee also uses a well-known product brand. In the first case, this is also implied, but here everything is spelled out in the agreement.

Other franchise options, when a whole business concept is provided, work on the “no investment” principle in exceptional cases, namely:

If a new region is being developed. In order to obtain the much desired business expansion, the franchisor has to sacrifice certain benefits. Such offers are rare, and they are often offered to experienced businessmen who have achieved certain success.
Investment from the franchisor. Such situations happen if a company practices developing its own promising point directors (employees) into franchisees. In this case, there will also be no investments from the new partner.

Examples

It would be a good idea to consider specific franchise offers without initial investments and/or royalties.

Furniture store Diso

You can open this franchise with only 500 thousand rubles and this is a concrete investment in the project. There is no need to pay a lump sum fee or royalties every month.

Other important conditions include:

Premises – from 40 sq. m., owned or long-term leased.
Availability of funds for investment in the specified amount.
The room should be located near a crowded area.
In order to successfully work on this proposal, the terms of the contract must be strictly observed.

The franchisor claims a payback period of 6 months.

ALBA

The company produces high-quality classic shoes made of leather and suede. This product is always in price, which practically guarantees the success of the outlet. There are no fees or ongoing payments; the franchisee is required to:

Find and repair the premises.
Purchase the necessary commercial equipment and equip the store technically.
The product is provided on a commission basis, the amount of remuneration is determined in each individual case.

The franchisor offers comprehensive assistance. Including training for the franchisee and his staff. Store content: the assortment is selected according to the size of the retail space and the marketing specifics of the franchisee’s region of operation. To determine all these aspects, the project launch team visits the new partner.

Orby

The Orby children's clothing franchise does not require a lump sum payment or royalties, but the investment to launch the project is at least 2.8 million rubles. Specific investments depend on the region and the size of the retail space. The latter, by the way, should not be less than 70 square meters.

Conditions:

The retail space must be located in a shopping center of category A, that is, a large one.
It is mandatory to have a children's corner and development complex in the shopping center.
Cooperation is possible only on the terms of full compliance with the terms of the agreement.

Fabretti

The franchisor offers to sell fashion accessories. All you need to open this TT is to have funds for investment in the amount of 600 thousand to 1.5 million dollars. It all depends on the format of the store. In the first case, it is an island in a shopping center, in the second, a full-fledged store at 25 m kV.

The franchisor's network sells only branded accessories and leather goods. The boutique is mono-brand, that is, it represents only one brand.

Important! An interesting feature of this offer is the opportunity to purchase the first batch of goods in installments of up to 6 months. That is, in fact, to start the project, you only need funds to rent the premises.

Potential franchisees are required, in addition to the desire to work, to also have experience in running a retail business in the fashion industry; it is advisable to have available funds to launch the project.

Tom Farr

A fairly popular brand that has long been in demand in the CIS and Russia. Clothing collections are distinguished by individual style, relevance, original cut, comfort and affordable prices.

You can open stores of different formats under this brand without investment, which differ in area, investment to launch the project and possible markup. Interestingly, it is the franchisor who renovates the store and creates its corporate identity, and the design project is created absolutely free of charge.

Important! In the event of the formation of unsold remains of past collections, they can be returned to the franchisor.

The work of each franchisee is supervised by a personal manager and merchandiser. There is access to a hotline, 24 hours a day.

Catalog of franchises without investment in Belarus

Current franchise offers without investing large amounts of money, which are presented for the Belarusian market:

tamm'antimebel is a network of retail outlets selling furniture of original design. The company has been operating since 2003 and promises a project payback of 3 months. Investments 49–750 thousand rubles. There are no royalties or entry fees.
SILVER SPOON is a retail outlet selling branded children's clothing. There are no royalties or lump sum payments. Investments 350 thousand rubles.
Mangosteen is a network of vending machines with children's toys, souvenirs and jewelry. Investments 240 thousand rubles. There are no additional payments.
Kitchens VARDEK is a network of furniture kitchen showrooms. Investments amount to 150–500 thousand rubles. There are no additional payments. Payback period is 1-2 months.
Ringing Cedars is a retail outlet for selling cedar products. There are no royalties or lump sum payments. Capital investment 120 thousand rubles. The payback period for the project is 2-4 months.

In conclusion, we note that it is impossible to buy a franchise without investment, so it will not be possible to completely avoid costs. When choosing a cheap franchise, be careful and study the terms of the contract in detail. Even before signing it, read the opinions of other franchisees working with your chosen company and make sure whether the project is profitable and whether it is worth opening a business on it.

Franchisor company and network marketing as an investor

To receive investment from franchising, you must go through several stages:

Work for a franchisor company.
Get a management position.
Prove yourself as a positive, successful and talented person who can be entrusted with the management and ownership of the franchisee.
Convince the owners or top managers of the company to provide a franchise or transfer a branch of the company for management.
Become a partner of a company or the owner of a separate business outlet.

Attracting a third party investor

Attracting an investor to finance the creation of a franchise business is much easier than other ideas.

The advantages of risk assessment for investors are obvious:

A franchise implies a well-established scheme of activities that protects against beginner mistakes.
It is possible to study the indicators of profitability, payback and success of other similar franchised enterprises.
The presence of a well-known brand, which naturally attracts additional customers.

To convince an investor to invest, you must:

Show with specific examples the success of a franchise company.
Show a ready-made business plan approved by the company and convince of the profitability of working in this direction.
Demonstrate specific conditions for working with a franchise company that allow you to reduce costs in the event of negative company performance.
Outline the terms and conditions under which you become a full-fledged owner of the enterprise (full payment of interest, the entire amount of investment).

To attract an investor, it is necessary to offer favorable conditions for him:

taking on all business risks;
guarantee uninterrupted operation of the enterprise;
dependence of wages on performance results;
the controlling stake in the property belongs to the investor;
the investor's share is redeemed at a predetermined price within a certain period;
interest payments on invested funds must exceed the market average;

Network Marketing Company

Working in a network marketing system allows you to initially simply earn money, and after creating your own network of distributors, you can be a successful entrepreneur.

The company provides the entrepreneur with:

education;
simple and understandable work model;
recognizable brand;
product catalogs;
the opportunity to work without personal investment;
income as a percentage of sales;

Working in such an enterprise provides an opportunity to develop certain qualities that are necessary to get started:

high level of communication skills;
ability to promote and sell products;
high responsibility for the results of their activities;
discipline;