Small franchises may lack the wild growth potential and instant brand recognition of some of their larger counterparts, but they often make up for it in terms of manageability. For prospective entrepreneurs, these businesses can offer a unique chance at stable long-term profits.

Small Franchises Explained

small-franchisesFranchises come in many varieties. At their inception, most meet the Small Business Association’s classification as small businesses, but some are notable for remaining smaller than others over the course of their lifetimes.

Small franchises may include businesses like ATM, check-cashing, vending machine and kiosk franchises. Although there’s no fixed dividing line between larger franchises and smaller alternatives, most niche opportunities and service providers that operate on distributed business models are considered small.

Getting Started

Entry barriers for small franchises may be less significant than what you’d face when opening a big company. This doesn’t mean that they’re inconsequential, however.

Consider a kiosk franchise. Although you don’t have to pay for an entire retail space, you might compromise your profits if you’re not willing to pony up for rent in a popular shopping mall. Similarly, finding viable locations for your new ATMs might force you to negotiate with different business property owners and offer competitive perks in order to capitalize on their customer bases.

Growth Potential

small-franchises-2Certain small franchises could be easier to expand than large brick-and-mortar businesses are. ATM franchises are known for rapid growth, and some sources note that new ATMs are typically installed once every few minutes. Although their basic business model hasn’t changed for many years, vending machine franchises are still innovating and growing with novel offerings like healthier food and improved technology. As with any business, your decision-making capabilities determine your success.

Operating costs can represent a large portion of the overhead that you incur with smaller franchises. In addition to stocking your retail equipment as necessary, it’s vital to perform routine maintenance and upkeep. The mall or business that hosts your kiosk may also require that you conform to appearance or display guidelines. Location and impulse shopping often play much bigger roles than advertising does, so it’s important to keep up appearances and provide appealing products.

You may not enjoy the same level of corporate support that you’d receive with a bigger franchise, but this can actually work to your advantage. Many small franchise owners retain greater control to fine-tune their operating costs. For example, you might have the freedom to choose who supplies your vending machine stock from a range of regional and national providers, and you could potentially broker exclusive distribution deals.

Residual Income

small-franchises-3Remember that small franchises operate on a very different business model than other opportunities. Even when they succeed, many only provide residual income.

To generate lasting profits, you may have to invest for longer periods of time and be willing to wait. Patience is essential to growing any business, but when each of your revenue streams is smaller, it’s vital to continually reinvest in your company in order to grow.