How Much Does it Cost to Franchise?

Jun 21, 2017

There is a big difference between knowing how to run a business successfully and being able to set up a successful business. Setting up a brand new business can take much more work than many people expect. For instance, you may need to make major decisions about the best locations, reliable contractors, financing, lease options and vendor relationships. There are not many people who feel fully qualified to make such weighty decisions when they have never owned a business before.

Opting to purchase an existing franchise can help you step into the role of owning a business with just the right amount of assistance in place. You may wonder, however, if the cost of franchising is worth the much-needed help.

Costs Associated with a Franchise Purchase

In order to evaluate if the costs associated with owning a franchise, it is important to understand some of the types of possible fees. Here are a few:

Franchise Fee – This is an up-front payment that is made to the franchisor to seal the agreement. The size of the payment may vary depending on the type or brand of franchise. In essence, it is the price of partnering with the company. This payment is typically made when the contract is signed and gives you the legal right to use the brand, business systems and trademarks.

Franchise Royalties – A franchise royalty fee is charged monthly by some franchises. This fee is typically a percentage of the gross monthly sales made in each franchise.

Application Fee – Some larger chains require applicants to pay a fee before they are allowed to begin the application process.

Technical Assistance Fee – To ensure that all of your technical systems works properly and that they are able to communicate properly with other franchises, some businesses charge a technical assistance fee.

Advertising Fees - Opening a franchise often requires additional advertising so that the public knows about your business. There may be fees or costs associated with this type of advertising.

Training Costs – If you find that you must travel to a specific location so that you can attend franchise-specific training, then you may need to plan for travel costs such as hotel, food and airfare.

Once you factor in the different costs that may be associated with each franchise, you will find that the initial franchise fee is not the only number that you need to consider.

Don’t Forget What You Enjoy

The cost of purchasing a franchise varies widely based on the type of industry, and the amount of brand recognition. There are some that can be opened with only $50,000 in liquid assets and others that require an initial investment of over a $1 million. Just remember that once you have gone through the process of purchasing your first franchise, you will have reached your dream of being a business owner. Don’t forget to factor in what type of business you will enjoy owning and running while you are in the decision-making process.


Want to learn more about franchising costs with 7-Eleven?

Click one of the links below to view our franchising video, or to register for a webinar or seminar. Our webinars are free and available throughout the week, and we probably have an upcoming seminar in your area:

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