Costs to Buy Into Building Franchise

Costs to Buy Into Building Franchise

Franchising Start-up costs

In this article, we’ll explore the necessary costs involved in purchasing a Stroud Homes building franchise and how this capital will be utilised in your business operations and marketing endeavours.

Becoming a part of any franchise usually involves some initial investment and ongoing fees. However, at Stroud Homes, we understand the challenges faced by startup franchisees and have therefore kept our entry costs affordable. It’s important to recognise that a significant portion of the initial investment should not be viewed as a mere expense, but rather as an investment in setting up your business for long-term success.

Stroud Homes Bay of Plenty.

Cost vs. Investment

When it comes to managing a business, it’s important to distinguish between costs and investments. While it may seem that all expenses are costs that drain your resources, some costs can be considered investments.

Generally speaking, costs are expenditures that allow your business to function, while investments are expenses made to generate more revenue, profit, opportunities, or growth. In other words, costs meet current needs, while investments serve future desires. However, some people may view all expenses as costs, while others focus solely on investments and future returns.

Both types of expenses are necessary for a business, but it’s important to recognise the power of investments and the value they can bring to your business. Ultimately, while costs are essential to keep your business running, investments are essential for growth.

Stroud Homes Initial Investment

To give you a better understanding of the initial investment required, let’s break it down into three parts.

Firstly, we believe that you should have access to working capital that equals 10% of the total contract value of your builds. This amount is not an expense, but rather capital that will help you safely operate your business.

Secondly, our well-planned startup package ensures that you keep more money in your bank for working capital. This package, which is “at cost,” includes a new laptop, initial setup of the Stroud Homes software system, training and travel allowance, uniforms, stationary, and marketing items to help “Stroudify” your office. The upfront cost for this package is 25k, plus a 10k Grand Opening advertising allowance.

Michael Rabey Franchisee Testimonial

Finally, most of our builders typically start with a shopfront, and we keep fit-out costs surprisingly low by negotiating “rent-free periods” and leveraging our suppliers who provide most of the fit-out materials at no cost. We also recommend booking a business planning meeting with us to learn more about the initial investment, how Stroud Homes builders can fund the startup of their business, the typical first year in business, how many jobs you have to win, and how to project when you will get your money back and start making a profit.

Additionally, other miscellaneous costs you should budget for when establishing a new business may include legal and business fees, adviser/accountant’s fees, setup of the business entity, and travel involved in due diligence.

You can learn more about the costs by reading our Frequently Asked Questions.

Ongoing Fees

As a Stroud Homes franchisee, ongoing fees are structured to ensure that you are only paying for what you use.

For each home you build, your business will contribute a 3% service fee and a 1% marketing fund contribution. This means that if you are not building homes, you don’t pay any fixed monthly fees. Additionally, as a Stroud Homes builder, you can benefit from increased buying power, allowing you to purchase materials at approximately 6% better rates than as an independent operator.

This translates to a competitive advantage of about 3% for your homes. Best of all, conferences are free for franchisees, with no attendance fee – you simply cover your own travel and accommodation expenses. This ensures that you can stay up-to-date with the latest industry trends and developments without incurring any additional costs.

What do I get for my investment with Stroud Homes?

Investing in a Stroud Homes franchise offers a unique opportunity to access a wide range of benefits that can help set you up for long-term success.

Michael Rebay, Stroud Homes Auckland North.

With an investment in a home construction franchise, you gain the advantage of an $800,000+ investment into a design range with hundreds of house plans, each of which is already priced up inside the pricing system with a bill of quantities for each. This means you get access to great plans that are 90% on the way to being priced up, without having to spend $100,000 for a building estimator to price those designs up.

Additionally, the Stroud Homes franchise systems offer comprehensive training, mentoring, and support in areas such as managing cash flow, workflow, recruiting, and marketing, akin to having your own business coach.  You also get access to an extensive library of branding and advertising material, a sizeable website, and an in-house marketing team to help you with your local area marketing are also included in the franchise opportunity.

Furthermore, you’ll gain knowledge and support from other Stroud Homes builder franchisees who work as part of a team to share information and solve problems. With well over 1 million dollars worth of value included in the package, you’ll have access to all of these resources from day one, making your journey as a Stroud Homes franchisee smoother and more successful.

Am I financially ready to buy a home-building franchise?

Before taking the plunge and investing in a franchise, it’s important to ask yourself if you’re financially ready for such a commitment. Becoming a franchise owner requires a significant financial investment, and it’s essential to have a solid understanding of your finances to determine if it’s the right decision for you.

Here are a few questions to ask yourself before making an enquiry:

  • How much do you have to invest?
  • How much can you risk losing?
  • How much do you need to live on?
  • What is the total investment required for getting into the franchise?
  • What portion of the investment can be financed?
  • Can you find anyone willing to invest in you and your future?
  • How much can you earn as a franchisee?
  • How long will it take to break even?
  • What return can you get on your investment?
  • Can you get a better return from another investment?
  • Are the risks equal?
  • Is your research thorough? (Have you researched the industry, the franchisor, the disclosure documents, and talked with current and former franchisees?)
  • Do you have the assistance of professional advisors who are familiar with franchising?
  • Have you made a slow and detailed evaluation of the opportunity to determine if you will meet your personal and financial goals?

If you can positively answer all the questions then buying into a building franchise may be within reach for you!

Get in touch!

Take a look around the information on our website and gain some insights into what it is like to be a franchisee, what we are looking for in a successful franchise owner and our selection process.

For more detailed information please enquire today to receive the full Franchisee Information Pack.

To begin your journey select your ideal location and send us an enquiry via the form below.

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