By Cost

By Cost

How much does a franchise cost?  What’s the total investment in a franchise? What are all the costs in investing in a franchise?  These are all great questions, and ones you should consider, when looking to invest in a franchise.  Your budget will always be one of the most important considerations for any business in which you’re interested.

Franchises are required to disclose to you, the interested buyer, the exact costs to invest into their franchise through their Franchise Disclosure Document (FDD).  Typically, the franchise will give you an investment range, and then itemize the costs to show how they arrived at that range.  Many different items will make up the total franchise investment:

• The Franchisee Fee: This cost can range from very inexpensive to tens of thousands of dollars. It’s a one-time fee.
• Franchise Royalties: Generally, franchise royalties are a percentage of your gross sales and they may range from 4-8% of your gross sales (this will vary by franchise). Some franchises may have a flat fee rate. Royalties are paid to the franchisor for the ongoing support, training and infrastructure the franchise provides you.
• Marketing Costs: One of the values of a franchise is that it provides you marketing support on a local, regional and national level (if applicable). The franchise is able to create marketing buying power and institute marketing programs that will help your business grow.
• Equipment Costs, Insurance Costs: Some franchises require specialized equipment or specific insurance in order to operate their franchise. These costs will vary by franchise and must be disclosed in their Franchise Disclosure Document (FDD).
• Real Estate: This is typically the item that causes the range in a franchise investment. Simply, if the franchise you are interested in requires real estate, that price may vary dramatically by market.

FranchiseWorks.com makes it easy for you to consider the right franchise by aligning the franchises by investment.