Every business, regardless of the products and services they offer, requires funding to get off the ground and get started on the fast track to success. It’s important to know that the financial requirements differ depending on which type of franchise you decide to invest in. If you’re gravitating toward ownership of a franchise in the restaurant industry, then you’ll want to pay close attention to what we’re presenting here. 

Franchising Fee 

One of the first costs that you’ll incur is what’s known as a franchising fee. This is a lump sum paid to the franchising company and gives you the right to operate a franchise location and represent the brand. 

Upfront Costs

If you’re taking over a franchise from a previous owner, there’s a good chance your upfront expenses will be lower than if you are opening a new unit. However, if you’re starting a franchise in a new location, there are some start-up costs that you should be aware of. These are generally estimated and included in the Total Investment Cost and include:   

• Rental Space 
• Supplies and equipment, furniture, and fixtures
• Insurance, Licensing & Permits
• Advertising & Marketing
• Working Capital to cover operating costs

Royalties 

In addition to the franchise fee you paid at the time of signing your franchise agreement, and the start-up or investment costs that you have planned for, there are likely to be additional fees paid to the franchisor. These come in the form of royalties and are typically charged monthly. This is payment for the use of the franchisor’s intellectual property. Before signing a franchise agreement, you should always make sure you understand the one-time and ongoing financial commitments and have a franchise attorney review the franchise documents. 

Labor 

A restaurant franchise requires a solid team of employees to function on a daily basis. Servers, cooks, and cashiers are all important positions that need to be filled by competent and responsible individuals. Aside from paying their wages, there are additional costs that you’ll be responsible for. These include such items as uniforms, yearly payroll taxes, and any training programs required by the franchisor or others that you want to initiate. 

Financial Aid 

The good news is that there are financial resources that can help you with some of the initial costs, including organizations that are specifically geared toward small business owners. Also, depending on the situation, bringing on additional investors to assist you with startup costs can be a beneficial strategy. 

Your Opportunity Awaits…

Have you thought about the advantages of entering the food industry via franchising? Well, this could be the perfect time to seize a tasty opportunity. At FranSave, we can help steer you in the right direction and present exciting opportunities you may never have considered. Saving your time and money is the value we bring to the table every day. For more information, visit us at fransave.com.