Franchise for a small town: TOP 4 business ideas in 2020

A novice businessman planning to open his own business needs to initially identify potential risks, find out the possible preferences of the future consumer audience, invest in advertising and carry out a whole range of preparatory activities. A franchise for a small town allows you to shift all this hassle onto the shoulders of well-known companies and end up with a fully established business with minimal initial investment. You can choose the right direction using a ready-made franchise catalog for a small city.

What are the specifics of business development in a small town?

As a rule, in a small town, the most necessary and completely traditional lines of business, without any frills, are popular. Here people also want to dress beautifully, receive high-quality household services, buy flowers and gifts, and eat fast food. At the same time, the list of opportunities in small settlements is often limited. Most of these settlements are traditionally associated with the activities of city-forming production: this is where the majority of the population works.

A franchise for a small town with minimal investment is an excellent option for starting a business

This is sometimes associated with the emergence of two leading problems:

• low level of support for a start-up entrepreneur from representatives of municipal authorities;
• a cautious attitude towards a newcomer to the market by local residents, which is especially common in a situation where the owner came from outside.

In addition, a newcomer to business has to independently solve problems with accounting, paying taxes, obtaining loans, purchasing and delivering equipment and components. The latter need often cannot be satisfied due to the lack of the necessary suppliers in their locality.

All these issues are mostly resolved by a properly selected franchise for a small city.

Baskin-Robbins

The American one appeared in 1945. It has been operating in Russia since 1988. The lump sum fee here is 15 thousand US dollars.

The partner is given recommendations on selecting a place to conduct business. A design project of the point is provided and training is provided. Comprehensive advertising support is provided. The parent company takes care of ordering, selection and delivery of the necessary equipment. Consultations are provided on all work issues.

The area required for running a business must be at least six square meters. Depending on the investment and personal preferences, the partner can organize a point in the food court, a summer pavilion, a kiosk or an “island”.

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Pros and cons of doing business in small towns

The significant disadvantages of doing business in small towns include the following:

• small population;
• limited list of residents' needs;
• a narrow range of potentially popular areas;
• low level of income of possible consumers of services and goods.

But with a certain approach, these disadvantages can also look like advantages. For example, thanks to word of mouth, news about the opening of a point of sale with high-quality products quickly spreads throughout the locality. The limited list of needs of local residents allows them to choose traditional business areas.

Often the very status of a compact settlement brings significant advantages to a beginning businessman. An advantage for someone who decides to choose an already established business and start developing it on a franchising basis is the readiness of government agencies to provide comprehensive assistance to the entrepreneur. Today the Russian Federation is interested in the development of small towns and villages, creating comfortable living conditions, and organizing new jobs. For these purposes, small business support programs are developed annually, a simplified registration procedure and other preferences are in place.

Young entrepreneurs are invited to take a training course in business incubators and, upon completion, are provided with support measures.

Public catering

The KFC franchise is an American chain of fast food restaurants specializing in chicken dishes. It was founded in 1952 by Harland Sanders under the guise of Kentucky Fried Chicken (Kentucky Fried Chicken) - today KFC.

Since 1997, the chain has been owned by the large restaurant company Yum! Brands, which also owns the Pizza Hut and Taco Bell brands.

The founder of KFC - Harland David Sanders or Colonel Sanders - became part of the KFC advertising campaign, although he was never an officer. The rank of colonel is an honorary title awarded annually by the governor of a state for distinguished service in public life. In 1935, Sanders was awarded the honorary “Order of Kentucky Colonels” with the wording “for his contribution to the development of roadside catering.” In 1930, at the height of the Great Depression, Sanders bought a roadside motel and cafe in Corbin, Kentucky. It was here that he discovered his talent as a cook and opened his first restaurant. During this time, Sanders began working on the famous 11-herb and spice breading recipe that the company still uses today.

Since 1952, the entrepreneur begins to travel around the country and talk about his chicken cooking system and the original recipe. At the same time, he entered into the first franchising agreement with Pete Harman from Salt Lake City for the right to sell his dishes in his restaurants. Over the course of several years, 400 franchise restaurants opened in the United States and Canada. In 1964, having already about 600 restaurants operating under the franchise system, Sanders formalized a deal to sell his company to a group of investors.

In June 2005, Yum! Brands and Rostik Group (Rostik's brand) announced the creation of a strategic alliance in Russia. The chain began to exist under the dual brand “ROSTIK'S-KFC”. In 2010, Yum! bought the network completely. The official launch of KFC as an independent brand on the Russian market took place in September 2011.

As of December 2011, 172 restaurants operate under the KFC brand in Russia and the CIS: 50 corporate outlets, 122 under a concession agreement. There are 12 restaurants in the CIS - in Armenia, Azerbaijan and Kazakhstan. KFC's focus at the moment is Moscow and other million-plus cities in Russia; the company plans to actively develop through a franchising system. According to the forecasts of the company's top managers, 34 restaurants will be opened under the KFC brand every year. The KFC chain in Russia and the CIS countries should expand to 300 restaurants by 2020. The company plans to develop restaurants in the In-line, Food court and Drive Thru formats.

Currently, 71% of restaurants operate under the franchising system in Russia and the CIS countries.

What are the features of building a business under franchising terms in a small town?

If you carefully analyze the presented franchises for a small town in the catalog, the desire of well-known business structures to develop the direction of providing services to the population becomes clearly noticeable.

Business providing services to the public is promising in small towns

It is best to open a new location in an area where there are few competitors or the quality of service suffers.

It is worth initially choosing a franchise of a well-known brand, for example, which is well known to customers thanks to its big name and fairly cheap segment of women's, men's and children's clothing.

A buyer in a small town will be flattered to purchase a product from a popular brand.

At the same time, it is worth paying attention to the breadth of the assortment. Thus, an interesting store of 1000 little things is more profitable for the owner of a specialized retail chain, the products of which are not needed every day.

Franchise for a small city: risks and benefits

The traditional risks of franchising for a small city are:

• a small number of future consumers of services and goods;
• conservatism of consumer views;
• low solvency of the population;
• shortage of qualified management and service personnel.

A provincial town or village will gladly include your favorite store or organization in the list of preferences. But at the same time, it is difficult for old-timers to recommend which point of sale they should visit and why.

On the other hand, franchises for a small city are beneficial for new businessmen due to small start-up capital, low costs for renting premises and utilities, and low staff salaries.

What is the basis for choosing a franchise?

An aspiring entrepreneur can choose the best franchises for a small city based on reviews from existing franchisees who started in business with similar initial data.

A guarantee of success is cooperation with a well-known brand that is opening its operations in this location for the first time. You can also set up production that already has competitors, but for various reasons they are not ready to provide the necessary products. For example, when the clothes being sold are too expensive for future buyers or do not correspond to popular styles.

Often a successful choice is to use ready-made ideas for services and products aimed at children. Even in tight financial conditions, they will try to take the kids to a children's cafe or buy their favorite toy.

And, of course, even in a small town it is important for residents to buy gifts and flowers. A mandatory analysis of this market will help you create a competitive price list.

Conclusion

So, the most popular franchises are selectively listed above. At the same time, there are quite a lot of franchises that are relevant for small cities today. Many companies today understand that business can and should be developed everywhere. New enterprises sometimes appear even in the smallest localities. Therefore, there is a high probability that the number of franchise companies will increase in such cities as well. The size of the local population is, of course, one of the main factors when opening a business in a particular city. By correctly predicting potential demand, you will be more likely to achieve a successful result.

Directions that are recommended to be avoided

Future entrepreneurs based in small towns are advised to be wary of working in the luxury segment, unless we are talking about elite villages. In other conditions, an expensive product or service simply will not find its consumer.

Another difference between a small town is the age of most of the residents. Current trends are such that young people prefer to move to megacities and therefore it is more profitable to target the product range at middle and older age groups.

Priority franchise areas for a small town

The experience of chain owners shows that the priority areas of franchising include:

• grocery retail outlets;
• bakery or pastry shop with pastries;
• fast food chains;
• clothing in the middle and low price segments;
• goods for the home, cottage, garden and vegetable garden;
• accessories for repair and construction;
• flower and gift shops.

Inexpensive household goods are a good idea for a business in a small town

Choosing a location for a children's cafe

Naturally, it would be preferable to place the establishment on one of the busy streets of the city. And at the same time, it is desirable that there are no cafes of a similar profile in the walking distance.

A good place for a baby food point would be areas with schools, kindergartens, stadiums or sports grounds. In this case, the cafe may have its own regular customers. We should also not forget about the transport interchange. Proximity to a metro station, public transport or minibus stops will only add to the establishment’s popularity.

In order to realize all your plans, the room must have a suitable area. It should be assumed that it must accommodate the cafe itself, space for refrigerators and food storage, sanitary facilities, etc. The size usually starts from 100 meters. Additional space may be required to organize a full-fledged game room.

What is the algorithm for choosing a profitable franchise in a small town?

Regardless of whether a native or a newcomer plans to start a new business, you will need to complete several mandatory steps:

1. Choose a suitable direction for future activity and assess its relevance.
2. Draw up a business plan and determine the amount of capital required at the start.
3. Analyze the proposed franchises in a small city in the catalogue.
4. Study the terms of cooperation (franchise cost, lump sum and royalty amounts, scope of services provided).
5. Correlate your financial, time, and labor capabilities with the requirements of the franchisor.
6. Obtain a loan if necessary, for which you should contact representatives of the municipal government.
7. Conduct preliminary purchases of equipment, consumables and goods.

At the first stage, it is recommended to choose franchises with minimal investments, which can be repaid in any case.

Tutti Frutti

The Tutti Frutti network was founded in 2008 in the USA. The company came to Russia in 2012. The cafes under this brand offer different types of frozen yogurt. To buy this franchise, you must pay a lump sum fee of 600 thousand rubles.

The partner here receives assistance in selecting a suitable site for opening a point. Negotiations are carried out with the landlord, legal assistance is provided. A business plan for the establishment is provided, and all technologies for preparing dishes are transferred. Personnel training is carried out. The opening of the cafe takes place jointly with representatives of the parent company.

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Types of profitable franchises for small cities with minimal investment

Marketing research shows that currently on the franchise market there are quite viable options with minimal initial investments, which can be recouped in a fairly short time and reach a stable profit in 3-4 months.

Children's Cafe

A small and cozy children's cafe will attract a significant number of visitors. A well-thought-out menu will ensure a constant flow of customers in such a situation. It is important to take into account the needs of the smallest guests and offer them dietary meals. For their older siblings, hot burgers and other types of food popular with teens may be offered. It will be successful to open two halls: for children and for adults.

The cost of a children's cafe franchise for a small city rarely exceeds 800 thousand rubles*, and often does not require payment of a lump sum fee or royalties. The investment, provided that the franchisor's requirements are strictly followed, pays off in 4 months.

Children's cafe franchise

Clothing store

The entrepreneur's emphasis should be on choosing inexpensive but high-quality clothing, mainly locally produced or imported from the CIS countries, and a wide range. Stores must be equipped with separate booths for trying on things.

For the first time, you can get by with franchises of domestic brands, which do not require large investments at the start (cost 500-700 thousand rubles) and promise profitability within 6 months.

Services for women

You can make good money from the desire of women to look beautiful at any age. There is room for a budding entrepreneur to expand here. In a small town you can open a nail salon or hairdresser. Numerous franchises in this area offer favorable conditions: starting investments from 400 thousand rubles, lump-sum payment from 60 thousand rubles, royalty 2.5% per month. Time to profit may take 7 months.

Budget hair salon franchise

Franchises in the service sector

"Genetic test"

An innovative fingerprint aptitude testing company. Franchisees are provided with a fingerprint scanner, as well as access to special software that processes the data and generates the finished result. The franchisor provides comprehensive sales training (Light Push system).

"HouseBureau"

Company for the construction of modern wooden cottages using the “Warm timber” technology. The franchisor undertakes to provide marketing and organizational support to partners and assist in staff training. The franchisee also gets the opportunity to use the company’s ready-made database of projects.

"Infolife"

The company is the developer of a system for testing abilities, character and health based on fingerprint data. The attractiveness of a franchise lies in its low investment, quick payback and the ability to choose a package that suits your pocket. The provision of services is possible at stationary and mobile counters, on-site, and also using vending terminals. Franchise points are open in 36 countries around the world.

"Fly.ru"

A travel IT company that uses its own software developments that allow you to optimize all processes associated with searching, booking and issuing tourist vouchers, which allows you to quickly process a large number of orders.

"RosFundament"

Manufacturer of pile-screw foundations, also carrying out work on their design and installation. Three types of offers are available depending on the planned scale of the enterprise: “Standard” (RUB 139,000), “Advanced” (RUB 199,000) and “Exclusive” (RUB 399,000 – 499,000)

"Layout Master"

Studio producing layouts and 3D models for a wide range of clients, including oil refining, industrial, military, transport and engineering companies from the public and private sectors. The franchisor conducts a three-day training course for partners, provides video instructions on creating layouts, and advises on opening and developing a business.

"Cheerful day"

Coffee shops offering “to go” coffee and fresh baked goods. The formats available are retail stand, “island” for shopping centers, street kiosk, street retail. Instead of online cash registers, an online CRM-ERP system is used, which reflects all sales and reports.

"Hodograph"

Training center for preparing schoolchildren for the Unified State Exam and Unified State Exam. The company has developed an extensive franchise package with detailed training materials on all aspects of the business. The franchisee can count on the support of a personal curator, assistance in creating a website and designing outdoor advertising, training in working in the CRM system and receiving special methodological literature.

"Stardog!S"

The first domestic fast food chain. The menu is based on hot dogs and sandwiches. Possible points of sale include mini-units, pavilions, drive-thru buffets and food courts.

"1C: BukhService"

A partner network for providing services in the field of accounting, personnel and tax accounting to small businesses. The franchisee receives software from for maintaining client bases and carrying out operational activities, as well as information and technical support.

Profitable franchise options

Everyone can see examples of successful and profitable franchising on the streets of large cities and metropolises. For example, these include the fast food chain “Vilka-Spoon”, goods for children’s creativity “Orange Elephant”, programming school “Softium”, stores of specialized equipment for home and office “220 Volt”.

Given the active development of entrepreneurship in the regions, including with the support of the authorities, franchisors are willing to enter new small markets because they see consumer potential in them. With a skillful approach, the disadvantages that exist in small cities turn into advantages.

*Amounts are current as of January 2020.

Instagram store of branded clothing and shoes

• Starting investment: from 45,000 rubles.
• Average payback period: 1–2 months.

The advantage is that this business does not require an office or any other premises. Enough stable internet. They create a separate account for you, set up targeted advertising, and provide you with scripts (ready-made scripts) for communicating with clients.

Relatively small investments usually pay off by the end of the second month, and for some sales masters, even in the first two weeks.

Before you open a store, find out if there are competitors in your city and talk to the franchisor about how to beat them. These could be reduced prices, an advantage in delivery speed, promotions, competitions, special offers. It is important to make sure that the franchisor sells a quality product that you like.

An Instagram store is good as a source of additional income: if you don’t dream of sky-high incomes, it’s enough to devote 2-3 hours a day to communicating with clients.