Entrepreneurs

9 low-cost franchises that can make you rich

Bob Woods, special to CNBC.com

The millionaires club

Shannon Wilburn of Just Between Friends
Source: Brandi Simons

"Most people would never think there are franchises you could buy for under $50,000," said Eric Stites, CEO and managing director of Franchise Business Review, which annually analyzes more than 900 franchises. "Most of us think of food or retail brands that we know," many of which require $1 million or more in upfront costs.

Well, put your assumptions aside, because here are successful franchise opportunities that, with a ton of hard work, can ring up millions in sales every year and make owners rich. This is a diverse group of sectors — such as travel agent, kids' soccer coach, home inspector, wildlife trapper — that require daily, hands-on effort from the owner. Prior experience is helpful but not mandatory, and all franchisors provide proven training, marketing and management tools. Top earners suggest that if you just follow those blueprints, you'll be successful.

Still, there are intangibles to consider when shopping for a franchise, Stites said. The franchisor's support culture is key. Look for ones that host regular, interactive get-togethers. "The biggest value is that network of franchisees," who share sales and marketing advice, tips on driving costs down or their financials, he said, adding, "Having that support culture is a huge piece."

— By Bob Woods, special to CNBC.com
Posted 11 May 2016

Cruise Planners

Michelle Fee, CEO of Cruise Planners
Source: Cruise Planners

Travel agent sounds like a bygone job, what with the boatload of do-it-yourself booking websites. And while many brick-and-mortar types have jumped ship, Cruise Planners allows someone with zero experience to become an online home-based travel agent for $10,495. Despite the name, beyond cruises, franchisees in this network of more than 1,450 franchises book air and land travel and hotels and provide related options, all in affiliation with American Express Travel Services.

Maria Tilton's occupational journey has taken her from cosmetologist, to site supervisor for a homebuilder, to Cruise Planner, whose sales have topped $1 million the past five years. "I love to travel but knew nothing about business," she admitted. "I came back from the six-day training and cried for two days, thinking, what the frig did I do? So I put on my big-girl pants and from that day forward knocked it out of the ballpark."

Today, Tilton cries all the way to the bank, profiting "close to $200,000 a year," she said. She runs the business by herself and admits never leaving her home office — except to embark upon numerous "familiarization" trips Cruise Planners offers agents, many with all expenses paid minus airfare.

Proforma

Proforma's Million Dollar Club
Source: Proforma's Million Dollar Club

"We make millionaires" is the trademarked headline on Proforma's website for prospective franchisees. That's a bold enticement and an outsize return for a minimum investment of $4,730 to get into the Cleveland-based franchisor's business of providing printing and promotional products to corporate clients.

In 1990, five years after the company started franchising, it created a Million Dollar Club and today claims that 1 in 7 owners have achieved $1 million in sales.

The upfront may be low, but the profile of owners of Proforma's 651 U.S. franchises — plus 49 in Canada and three in other countries — is lofty. "Many are seasoned corporate sales professionals or established business owners," said founder Greg Mozillo, "most with 15 to 20 years of experience in or outside of the industry."

Brandon Kennedy had worked for a similar franchisor before joining Proforma in 2004, experience that helped him turn a profit after two months. "We now have sales over $5 million a year," he said from his main office in Bakersfield, California, where he employs six people and oversees two satellite locations. "I was the quickest to join the Million Dollar Club," he said, adding that his profit margin is "a little higher" than the 35 percent industry standard.

Soccer Shots

Soccer Shots
Source: Kent Mast Photo & Video

Alex Woods was living the dream. He'd turned a passion for playing soccer, including four years at Trinity University in San Antonio, into a pro career, eventually with the Charlotte Eagles. To make extra money, he coached little kids for a local Soccer Shots franchise. "I saw how great their lives were," he said of the franchisees, themselves coaches, too, who made good money and went home to their families after practice. "What I didn't see was the business side of their lives."

That reality hit in 2009 when Woods hung up his cleats and invested in a Soccer Shots franchise in Houston, his hometown. At first he figured he could run it alone, but as more preschools, daycare centers and public parks signed up tykes ages 2 to 8 for sessions, "I started hiring coaches and office staff," he recalled. Today he manages a team of 30 people, and the franchise is growing nearly 40 percent a year. Gross revenues were about $1.5 million in 2015, he said, with a profit margin around 30 percent.

Woods is what Matt Kurowski, vice president of marketing for Middletown, Pennsylvannia-based Soccer Shots, calls one of their bootstrappers: "franchisees who work hard to build their business from scratch." The bulk of the company's 109 owners are new to franchising, each paying a minimum of $31,742 to get themselves — and their pint-size charges — up and running.

Woods' greatest challenge, he said, is "finding coaches who share your passion for soccer and kids." He hired a recruiter and director of coaching and said that coach turnover is minimal. His other secret to success? "Soccer Shots gave us a blueprint, and I just follow it." Now he's living a dream job.


Fit Body Boot Camp

Fit Body Boot Camp
Source: Fit Body Boot Camp

U.S. health experts continually cite the obesity epidemic, and the fitness industry reciprocally plumps up. While 35 percent of adult Americans are considered obese, the International Health, Racquet & Sportsclub Association reports that the number of health clubs grew 6.4 percent in 2015, to 34,460. Those stats help explain why Fit Body Boot Camp, in Chino, California, opened 15 new franchise locations a month last year, bringing its total to 417, said founder and president Bedros Keuilian.

Opening a big-box gym filled with the latest workout equipment can cost hundreds of thousands. FBBC offers a low-cost franchise model for $35,000. Scale is the exponential difference, Keuilian said. "A gym may need 20 personal trainers to handle 300 clients. It's a payroll monster." FBBC requires just three trainers and a front-desk person. "So as long as you have the passion, we'll teach you the business model."

Marcia Inoue and her husband Egan ran several martial arts gyms in Honolulu but were struggling to pay the bills. "We needed to do something to bring in revenue to stay alive," she said, "and that's when we stumbled across FBBC." In 2010 they opened their first franchise, now own three, have signed up 800 members and plan to continue expanding. "Our revenues are around $2 million, with a profit margin between 30 percent and 40 percent."

Inoue's coaches lead groups through so-called "afterburn" workouts and provide nutrition counseling all geared to fat loss, she explained. She credited FBBC's training and marketing support for their success and warns potential franchisees, "Don't reinvent the wheel."

National Property Inspections

National Property Inspections
Source: National Property Inspections

Bob McDonough was making a good living as a building maintenance coordinator for about 100 Target stores in the Southeast "but realized I wasn't cut out to be a corporate guy," he said. "I'm too independent and needed my own business." So in 2008 he became a National Property Inspections franchisee, inspecting residential homes and commercial buildings — just as the housing market tanked.

"Really, it was a good time to get into the business," he said, defying conventional wisdom. McDonough focused on the huge number of foreclosures sold in his Atlanta marketplace and cultivated relationships with banks, mortgage brokers and real estate agents as referral sources.

Today, as the market's revival continues, he's profiting from that pivot. "My revenues were $948,000 for 2015," his best year ever, he reported, marking a 57 percent increase over 2014. After royalties, payroll for his five other inspectors and part-time office staff and 5 percent for marketing activities, "I paid myself in excess of $100,000."

McDonough is one of 220 U.S. franchisees for NPI — another 30 in Canada operate under the Global Property Inspections name — said Bill Erickson, head of sales and marketing at the Omaha-based company, launched in 1987. The minimum start-up cost of $34,900 includes training, even for neophytes, tools of the trade and marketing support.

Just Between Friends

Shannon Wilburn of Just Between Friends
Source: Brandi Simons

In April, Kathy Winslow staged a huge pop-up consignment sale at the Oklahoma City fairgrounds, offering used kids' clothing, toys and paraphernalia for up to 50 percent off retail prices. Attracting 1,000 consignors and 8,000 shoppers and grossing nearly $500,000 in sales, it was the second of a half-dozen six-day events she'll organize this year in the OKC metro area, where she lives and owns three Just Between Friends franchises.

Winslow used to live in Tulsa, where a neighbor, Shannon Wilburn, and a partner founded the JBF concept in 1997 on a small scale, holding sales in her living room. Winslow moved to Norman and set up similar events. Wilburn's business grew, and when she started selling JBF franchises in 2004, Winslow grabbed one, eventually adding two more. The company now has 151 franchisees around the country, each investing a minimum of $27,000; more than a third own multiple franchises, CEO Wilburn noted.

"My daughter was 3, and it was a way to get first dibs on cute clothes and provide a little extra money for the family," Winslow said of her humble beginnings. Today she's bringing home at least $100,000 on close to $1.3 million in gross sales a year, and her daughter's studying business in college. "She may take over one of my franchises."

Many JBF owners — 97 percent are women — have other part-time jobs in between planning and marketing at least two events per year, usually in spring and fall, when they can undercut retailers' seasonal sales. That's when the workload requires full-time attention, Wilburn said. JBF is a faith-based company, she added, a culture reflected in disclosure information for prospective franchisees. "It's really a community business. It helps many people, so I want our franchisees to have a heart for others."

Critter Control

Critter Control
Source: Critter Control

Joe Felegi owns three Critter Control franchises and co-owns another in southeast Florida, where his 47 employees capture more than just raccoons, squirrels, bats and other common animals that shouldn't be inside homes and other buildings. "We also have pythons, iguanas, vervet monkeys — we're overrun with exotic species," he said. The upside of that problem is Felegi's bottom line, which in 2015 registered $4.5 million in revenues. During 27 years in business, his profit margin has ranged from 12 percent to 20 percent.

Felegi is one of 90 current Critter Control franchisees, and new ones can buy a territory for an initial investment of $23,440, said Sean Carruth, vice president of communications and a former franchisee. The 34-year-old company, based in Traverse City, Michigan, was acquired in 2015 by Rollins, which owns fellow pest-controller Orkin. The publicly owned parent is converting Critter Control's largest territories into corporately owned units, Carruth explained, but is still selling franchises in many markets.

Owners run the gamut, he said, "from guys like myself who came out of college with no experience and bought a franchise to career guys who want a change of pace." Felegi earned a degree in wildlife management, then worked for a year with the National Park Service before joining Critter Control in 1989. Since then, the company has expanded its home services to include animal- and pest-damage repair, attic restoration and insulation, and exterior cleaning. "Trapping animals will pay your bills," Carruth said, "but doing everything we train you to do will provide you with retirement."

Help-U-Sell Real Estate

Michael Zelena of Help-U-Sell Real Estate
Source: Michael Zelena

California businessman Don Taylor launched Help-U-Sell Real Estate in 1976 as an alternative to the traditional system of paying percentage-based commissions to brokers and their agents. Instead, Help U-Sell offers home sellers a fee-for-service model designed to save them money. Taylor began franchising the concept two years later, and today there are about 100 Help-U-Sell units across the country. Franchisees invest a minimum of $25,000 for a host of marketing and support services.

"We tend to attract the real estate professional who recognizes that the ordinary model is broken," said Ron McCoy, vice president of business development for the Sarasota, Florida-based company. That describes Richard Cricchio, a broker who purchased his franchise in Honolulu in 2000 after many years with Century 21 and Prudential. "I wanted to do my own thing, not the traditional stuff," he stated. Similarly, his 12 full-time agents "are required to have worked with a traditional brokerage so that they know the difference."

Last year Cricchio's franchise sold 160 units — homes and condos mostly on Oahu, though some on outer islands, averaging between $500,000 and $750,000 — totaling nearly $91 million in sales revenues. Over the years, after expenses including a 6 percent royalty payment, "my profit margins have been close to and exceeded 20 percent," he reported. "Owning my own office space has been a huge contributing factor." Plus, he's an aggressive marketer, with his own magazine, TV ads and live weekly radio program.

Weed Man

Weed Man
Source: Weed Man

American homeowners have an obsession with green lawns — and with farming out maintenance of them, spending billions annually on verdancy. Interestingly, a Canadian, Des Rice, picked up on that, and in 1970 he launched Weed Man, began franchising in the provinces in '76 and spread to the United States in 1996. Today, 277 franchisees, 181 in the United States, provide fertilizing, weed control and insect control to tens of thousands of customers. "We don't mow grass," clarified COO Jennifer Lemcke from company headquarters outside of Toronto.

Historically, mostly professional landscapers signed up with Weed Man to broaden their mowing, planting, raking and trimming services. "Today we see more franchisees from outside that industry," Lemcke noted. Regardless, all newcomers pay an initial investment of at least $43,700 for training, marketing support and a computerized operations system.

Jim McClure had his own landscaping business in Roswell, Georgia, when he bought his Weed Man franchise in 2001. He's since paid more to expand his territory to virtually all of north Atlanta. "I have around 50 employees, and we service close to 10,000 customers a year," McClure said. A big reason he went with Weed Man, he added, was the company's automatic customer renewal model, which means he doesn't have to resign them every year. Lemcke reported that franchisees enjoy an average 75 percent customer retention rate.

McClure grossed around $4 million in revenues in 2015 and averages a 15 percent to 20 percent profit margin annually. While the company's meticulous systems have contributed to his success, he also credits its culture. "You need to have the same values — work ethic, moral integrity and character."

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