The Cost Of Opening Up A Franchise

May 29, 2013 Facebook Twitter LinkedIn Google+ Business Advertising,New Business

The Cost Of Opening Up A Franchise

by Robert Fogarty

Many people are venturing on in to the business world of franchising. Essentially franchising means that you take hold of

The Cost Of Opening Up  A Franchise

The Cost Of Opening Up
A Franchise

already existing business model and set up your business based on this existing brand. There are a lot of positives for starting business this way. Before you start of your franchise you need to look at the costs and here is a list of important components you must look at.

Choosing the type of business

And important factor in calculating the costs is of course what type of franchise you are setting up and in what business sector. There are franchises in various areas, such as mobile industry, fast-food, and leisure business and so on. Leisure business, for example franchise hotels, are often on the high-end with cost possibly up to $5 million and fast-food business on the lower end with costs around $200,000. The other important factor to consider is also whether you can run the franchise from home or do you need a business premise. The type of business you choose will also show you what kind of work force is required. The more employees needed the more the cost will generally be.

Franchise fees

Another factor in the cost calculations is the franchising fees. This is a one-time payment for the rights for the brand. It often involves the operating systems as well as some ongoing management help and training. This one-time payment varies a lot depending on the franchise brand. The more established the brand the more it will cost. The usual bracket for the fee is around $20,000 to $50,000, but as mentioned can be even higher for well-known brands. Alongside this one-time payment there will be ongoing royalties you need to pay. These are usually a certain percentage of your yearly revenue. You don’t need to calculate these to your start-up costs but it is good to consider them when choosing to take the path of franchising.

Setting up and development costs

Depending on the type of business you also need to consider the setting up costs. These include then renting or building the premises, with building from scratch naturally being more expensive. For the setting up you also need to consider any equipment you will need to buy and keep in mind it isn’t always provided by the brand. Promotional and marketing expanses will be higher at the start. It is essential to also calculate how much you will need for the up keeping of the business including the employee costs and ongoing marketing expenses. Often franchises are expected to provide certain financial requirements in terms of assets and liquidation before they are allowed to apply for the franchise. This is to provide assurance to the brand about you being able to keep the business running before you start making profit.

Starting up a franchise might seem daunting at first glance but don’t be discouraged. Careful planning and calculation of the franchise costs will help you get a good start for your new business adventure.

You can visit the following website for complete guidelines: Franchise Opportunities, Open, Costs, Process

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