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How Much Does it Cost to Start a Business Franchise?

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Buying a Business Franchise Rate Quotes

Do you dream of owning your own business? You could be your own boss, set your own hours, and, if all goes as planned, make a lot more money! Buying a franchise is a great way to leap into owning your own business. It's far less risky than starting a business from scratch because you're buying into an established name with brand recognition.

Of course, buying into a franchise is no guarantee of a windfall. You still need to invest time and hard work into the business. You also must be willing to invest a significant amount of funds in start up costs to achieve your dream.

Cost to Start a Business Franchise

Fees vary greatly from one franchise to another. Very generally, you're looking at spending anywhere from tens of thousands to hundreds of thousands.

One of the first expenses is the initial franchise fee, which can cost anywhere from a few thousand dollars to hundreds of thousands of dollars, depending on the franchise. Most commonly, however, these fees fall in the range of $20,000 to $50,000. They cover the costs of initial training, support, and set-up assistance. Typically, they are non-refundable.

You'll also pay a significant chunk of money to rent or buy a facility, equip it, and buy the first round of inventory and supplies. For inventory alone, budget anywhere from $25,000 to $150,000. Keep in mind that with a franchise, you can't cut corners when it comes to the facility and equipment. Franchise agreements usually have strict standards to which you must adhere.

Other fees you can expect to pay at the outset include:

  • A "grand opening" fee that pays for the company to promote your franchise
  • Operating licenses
  • Insurance
  • Legal fees ($1,000 to $5,000)

Cost to Own a Business Franchise

When you buy a franchise, you're paying for the right to use the company's name. You're also paying for the company's expertise, advice, and guidance in running your business. In exchange for this, you'll be expected to pay royalties.

Different franchises have different methods of charging royalties. Many base the cost on your gross weekly, monthly, or annual income. Usually, you'll be required to pay these fees even if your business isn't turning a profit.

The Benefits of Starting a Business Franchise

Starting a business franchise is a major investment. But, don't be discouraged by the numbers. Starting any business requires a huge influx of capital - and some risk. And, unlike starting a business from scratch, you'll have brand recognition from day one.

When you purchase a franchise, you're buying into a business model that's already proven. Many other franchise owners have been success in their own franchise. If the business is run properly there's no reason to believe that you can't do the same.

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