Daily Archives: May 10, 2018

How Much Does it Cost to Franchise Your Business?

A group discussing cost of franchisingFranchising is a great way to start a popular business without having to handle all the marketing and brand building. All you have to do is meet the franchiser’s stringent requirement and have the money needed to buy the franchise.

So how much does it cost to franchise your business?

The quick answer is the cost varies depending on your business. Some franchises can run from your home, others need specialized equipment to run. The differences in business operation will always determine how much you need to set up the business.

In addition to this, you will spend a great deal of money on legal costs and quality control reports. Legal paperwork involves:

  • Filling franchise agreement documents
  • Going through and implementing trademark protection policies
  • Going through and understanding the license agreement

There’s More to it Than Franchise Fees

Even though most new entrepreneurs focus on the franchise fee, there are other important costs that will contribute to the total amount needed to franchise. The franchise fee just covers the charges you need to enter the franchise system. You will still need to pay for:

  • Office space, supplies and equipment
  • Industry-specific appliances or equipment
  • Décor and signage for the business premises
  • Legal, licensing, accounting and other support staff fees
  • Insurance and taxes
  • The first opening marketing push
  • Initial inventory and petty cash to push you through the first months

It’s hard to estimate a franchising figure without applying the above facts to the business. For instance, $2,000 might be enough to franchise a cruise planner’s business while $60,000,000 is the absolute minimum you need to franchise a 300-room Hilton hotel.

The best way to know how much you will spend setting up your franchise business is to do specific case studies. Look for the actual costs to franchise the business you want, go through the requirements and use that to make a more accurate cost estimation.