How Much Does A Franchise Cost

Title:How Much Does A Franchise CostWord Count:594Summary:How much does a franchise cost? Of course the costof obtaining and starting a franchise depends onseveral variables. For instance, the type of

industry, size and location are some of thedifferentiating factors.Keywords:How Much Does A Franchise Cost, businesses forsale, franchise for saleArticle Body:How much does a franchise cost? Of course the costof obtaining and starting a franchise depends onseveral variables. For instance, the type ofindustry, size and location are some of thedifferentiating factors. However, there are somebasics that you could keep in mind if you arecontemplating becoming a franchisee.First of all, you will usually have to pay afranchise fee, which averages somewhere between$20,000 and $30,000. However, the fee could beless than $10,000 for businesses such as mobile

and home-based businesses, or in some cases couldpossibly cost $100,000 or more. A few examples ofthese more expensive franchises include buildingmaintenance businesses and some types of athletictraining facilities.Since you are gaining the advantage of taking partin an already recognizable business name, andusually ongoing support from the franchiser aswell, franchisers typically stipulate that apotential franchisee meet other financialrequirements. A predetermined amount of readilyavailable funds that are not borrowed is usuallya necessity as well as a certain net worth. Inorder to pay for ongoing expenses that are notcovered by revenue you will also need a guaranteedamount of working capital. Depending on the typeof business, it is important that the workingcapital cover a particular length of time,ranging from a few months to possibly two to threeyears until the business is in full swing. Thefranchiser typically provides an estimate of the

amount needed.Besides the franchise fee, other up front costscould include professional fees such as legal andaccounting services, insurance, and operatinglicenses. Employee training, inventory, andequipment are usually part of the startup as well.Also plan on, rent and possible leaseholdimprovements, and other costs involved in settingup a retail location including the purchase offixtures, signs, and landscaping. You may alsoincur grand opening and initial promotionalexpense to get the business going.Keep in mind that many times a higher initialinvestment does not necessarily mean a higherreturn. Often times franchises can be startedwith a total initial investment of less than$200,000 and sometimes even less than $50,000.Some home-based business such as handymanfranchises and marketing franchises provide adecent return with little up front cash.

Ongoing, you will need to be prepared tocontinuously pay royalties to your franchiser,possibly 4 to 6 percent of your revenue. Also,insurance (liability and health), inventory, andequipment maintenance would be continuousexpenses. Of course, there will be employeesalary and benefits. Additionally, you may berequired to pay into a national advertising fund.Before making a decision on a franchise, it isimportant to obtain from the franchiser a copy ofthe Uniform Franchise Offering Circular (UFOC),also known as the disclosure document. The upfront fees are outlined in this circular. Thedocument should describe the initial fee whichmay be non-refundable as well as the other startupcosts. If there are any items that you believemight be a startup costs that are not mentionedin the disclosure, be sure to ask about them.

All in all, you want to be sure your financialsituation will cover expenses for you and yourfamily during the time it takes to get thebusiness up and running. This may take severalmonths or a bit longer than that. Keep mind youroperating expenses as well as personal expensesfor the first year or two in business. In orderto have the best chance of success with afranchise, it is recommended you contact afranchise consultant to discuss your goals andfinances.