08 Sep, 2017

How Much Does It Cost To Start A Franchise

How much does it cost to start a franchise? There is no specific answer to the question. The cost of starting up a franchise largely depends on the kind of franchise involved. This makes it hard to come up with a figure for all franchisees. When searching for a franchise, one should not just look at start- up cost but also other underlying factors. Franchise opportunities with low start up fee should be considered with caution. This is because there will be ongoing costs that will be involved in operation of the franchise after purchase. The reason why many franchises fail is because they lack funds that will cover the ongoing costs. The sector or industry is one way of judging how much does it cost to start a franchise? The range of franchising opportunities varies greatly in terms of start up costs. Major chains have a higher cost up fee than that of a small franchise that is home based. There are franchises that are in the same industry but with varying costs. One of the reasons why there is much difference among the cost of such franchises is the location. The franchises that are at prime locations will cost more. The other reason why franchises that are in the same sector have different costs is the growth that they have achieved. Businesses that have achieved much growth have a higher franchisee fee. The services and support that the franchisor will be providing also determines the cost. There are number factors that contribute to how much does it cost to start a franchise? A franchise on sale has many associated costs that contribute to the final cost. These include ongoing costs and one time costs. Franchise fee This is the amount that is paid first when purchasing a franchise. It is set by a franchisor and is paid on signing a franchise agreement. The fee enables the investor to use the name and brand of the franchise. Initial- money investment This is money that is paid on top of start up fee. A number of franchisors charge a certain percentage of start- up fee as a qualification for buying a franchise. Royalty fees This is an ongoing-cost between the investor and the franchisor. It is detailed in franchise agreement and it is negotiated when purchasing the price. Professional fees This fee caters for hiring of an accountant and a solicitor who play a crucial role in negotiations and overseeing the running of the business when it starts operating.