One decision you’ll need to make along your franchising journey is whether you’d prefer to work from home or at an office. Many entrepreneurs are interested in working from home because of the enhanced work-life balance and flexibility. By helping you lower your operational costs both upfront and long-term, home-based franchising might also put you in a better position to profit.

Home-based franchises, especially those in the home services industry, are appealing low-cost franchise opportunities. Let’s take a closer look at what you should know about franchising from home.

Franchise Startup Costs for Home-Based Franchises

Why choose a home-based franchise?

There’s a lot of benefits to choosing a home-based franchise, from improved flexibility and control over your schedule to the ability to write off your home office as a tax deduction. What you may not realize is that there are considerable financial benefits to franchising from home. Home-based franchises have lower startup costs and low overhead, and they’re also easier to scale. Many franchise opportunities in the home services industry, like those in the Home Franchise Concepts family of brands, can be operated from home. 

What’s the initial investment?

Every franchise startup cost is a little different, but they’ll all include many of the same elements. Regardless of which brand you’re franchising with, your first expenditure will probably be the franchise fee. In most cases, it will be due in full when you sign your franchise agreement. While you might be under the impression that the fee is what you pay to use the brand’s name, that’s not accurate. What it actually covers is operational support, training, and marketing. This fee is meant to be cost-effective and has a standard range of $10,000 to $125,000.

As with an office-based franchise, home-based franchises provide you with a breakdown of the initial investment costs under Item 7 of their franchise disclosure document (FDD). There’s a lot that goes into the initial investment cost, and the actual amount you invest will depend on factors like materials, equipment, marketing, and payroll. Sometimes a franchisor will also specify the amount of working capital you need for your first year in business. Generally, the chart under Item 7 will show you a range of what your initial investment could be, with a low end and a high end. 

What you won’t find in the franchise startup cost for a home-based franchise are the costs associated with opening a brick-and-mortar location. Home-based franchises eliminate the need to build, rent, or renovate, meaning that you won’t have to worry about construction or real estate. This alone will lower your franchise costs, both to start and over the long run. While it’s not possible to say exactly when you’ll achieve ROI, choosing a home-based franchise may put you in a position to get there faster.

What about hidden fees?

A common pitfall in business ownership is the inability to foresee every expense. Franchisors are required by law to share important financial information with you, which means that you’ll never be surprised by hidden fees. You’ll find the fees you’re responsible for under Item 6 of the FDD. Item 6 gives you a clear breakdown of the franchise fees themselves, including how often you’ll pay them. Generally, they’ll be a percentage of your gross sales for the reporting period, which could be weekly, quarterly, or annually.

Fees vary by franchisor, but you can almost always expect to pay a royalty fee and an advertising or brand fund fee. The royalty, which is usually 4-10% of your gross sales, covers your use of the franchisor’s brand and proprietary knowledge. The advertising fee is usually 1-7% of your gross sales and contributes to the brand’s marketing efforts. In many cases, the fee is split between national initiatives that support the entire system and local marketing that reaches out to your community.

Invest in a Home Franchise Concepts Brand

To make the most of the opportunities home-based franchises can provide you, partner with an industry leader. Many of Home Franchise Concepts business models adapt perfectly to an at-home format. The majority of our brands can be operated from a home office, and some just require a small storage facility. With the resources we provide you throughout the life of your franchise, you’ll have everything you need to build and maintain a thriving business that doesn’t rely on a brick-and-mortar retail space.

For more information about our brands and home-based franchise startup costs, submit an inquiry form. One of our franchise advisors will be happy to walk you through our various franchise opportunities.