For the hundreds and thousands of people who are looking to enter the business world, franchising provides a wealth of opportunities to succeed. Franchises come in many different forms, from fast food and coffee shops to pet care and home improvement. And while there are certainly notable differences between the various franchises, one aspect that they all have in common is that they require money to startup. There are three distinctive fees that you can expect to pay as long as you own and operate one.
When you decide to become a franchise owner and sign the franchise agreement, you can expect to pay the initial franchise fee upfront. The size of this fee will vary, depending on what franchise you decide to invest in. This is a one-time fee that defines your franchise as a part of a parent company. This also allows you the right to use the franchisor’s intellectual property and follow the rules and guidelines that are laid out for you.
Because you’re using someone else’s intellectual property, franchisors are entitled to a percentage of the profits you make. These tend to range from 4%-9% of profits each month, and the franchisor will review these fees with you before you sign the franchise agreement. This fee isn’t just meant to compensate the franchisor. This is what entitles you to training and ongoing support from the franchisor as you continue to run the business.
One of the advantages of operating a franchise is that you already have built-in brand materials and maybe even brand recognition. Despite this, you’ll still need to reach a specific demographic to market your products and services to them. Advertising fees are an ongoing expense for as long as you operate a franchise. These contribute to promotions and ad campaigns that the franchisor conducts. The franchisor may require that a monthly percentage or flat fee be committed to marketing and advertising.
The fees that you’ll pay as a franchisee will certainly vary on what type of business you decide to invest in. While some franchisors have these policies set in stone, others will be willing to negotiate how much you pay during each cycle. Make sure you get any agreements in writing for assurance. You should be able to find any information about fees in the franchisor’s FDD (Financial Disclosure Document)
If you’ve been thinking about the world of franchising, we’re here to help. FranSave has assisted many in achieving their goals and making their dreams a reality. If you’re ready to seize the perfect opportunity, pay us a visit at fransave.com.
This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your jurisdiction. Franchise offerings are made by Franchise Disclosure Document only.