Caroline McDavid and her husband started South Carolina-based franchise business Juiced Fuel in 2022 to take that pesky stop at the gas station out of people’s day. They’ll come to you, top off your tank, and be on their way. There’s no real estate involved, no fancy office space, or hiring fairs to contend with. Just a truck and the ability to find people willing to pay to have done what most of us do – albeit grudgingly – on our own.
The fees involved upfront for a Juiced Fuel franchise are $59,500, plus a truck, which usually ends up putting the initial costs at closer to $100,000 to start.
“I hear all the time that people have been burned by franchises and strive to make sure people are not forced into paying something they weren’t aware of. This is a new concept, very important for this to be successful. Our brand, baby we created,” McDavid said.
Juiced Fuel has sold 19 territories from Kansas to Kentucky to the Carolinas. Their flagship business based in Charleston has made over $1 million since it first opened.
The McDavids’ venture represents a relatively recent trend in franchising: mobile-first businesses that leverage smartphones and apps to deliver services directly to customers. These franchises often center around filling in the gaps in a customer’s life whether it be dog poop scooping, mobile car detailing, cleaning dryer vents or, fueling up your car.
There have always been what are described as “low-cost” franchises — there is no precise definition as some businesses tagged with the description require as little as $10,000-$15,000, while the International Franchise Association typically cites those requiring under $100,000 to start. According to the IFA, they continue to grow, with home-based and mobile franchises leading this category.
“We’re seeing a significant rise in emerging franchise opportunities across sectors like pet services, tutoring, mobile car detailing, fitness coaching, home services, and even wellness,” said Brian Luciani, chief growth officer at SMB Franchise Advisors. He says these are all built on the premise and promise of leveraging the flexibility and low overhead of a lean model while still providing a solid franchise support system behind them.
Lack of real estate costs are a factor in keeping the required initial investment down.
Owning a franchise is, in some respects, a classic example of the American dream. Business textbooks and websites are packed with case studies of bootstrap-pulling businessmen and women who have prospered through franchising. Often the franchising has involved golden arches, smiling colonels, or other iconic brands. Traditional franchising, though, can have an increasingly high financial barrier. Some market estimates for the cost of obtaining a McDonald’s franchise license and getting a restaurant up and running reach above $1 million. In its own materials, McDonald’s recommends a minimum of $750,000 in liquid assets to be considered as a franchisee and at least $100,000 of working capital required for each restaurant purchased.
The wide financial gap between new low-cost and existing higher cost franchise models is part of the problem, according to Keith Miller, public affairs director for the American Association of Franchisees. “It’s too easy to call yourself a franchise and imply that you are a proven business,” Miller said.
Experts say that the low cost can be an enticement to lure in the buyer before getting socked with more fees. They advise any current or prospective franchise owner to consider the following factors:
Headline investment numbers don’t tell the whole story
“When it comes to franchising, the headline investment number you see — typically $25,000 to $50,000 — can be very appealing, especially for first-time entrepreneurs looking for lower cost entry points to business ownership,” Luciani said. But he says that the initial franchise fee is just one piece of the economic puzzle. His firm always advises entrepreneurs to focus on the total cost of ownership: working capital, local marketing, licensing, insurance, and the time investment required to scale to profitability.
“The best franchisors are transparent about the total business costs and are committed to building sustainable systems that help franchisees succeed long-term,” Luciani said.
New, unproven franchise models often rely on selling licenses
Miller says prospective franchisees are drawn in with visions of being their own boss, having a proven business model, and no experience necessary.
“The fact is, though, many of these low-cost franchises are not proven at all and the franchise company itself has little experience or financial stability,” Miller said. New franchises that call themselve