Knowledge Base

What do franchises cost?

Costs
Written by
Sam Stawarz
Published on
June 12, 2023

Introduction

Your first step in deciding if a home-based franchise is right for you is to start looking at the cost. You'll need to consider two main factors when assessing the price of a new business: the upfront costs and ongoing royalties (also known as royalties).

The cost of a franchise can be divided into two main parts.

The cost of a franchise can be divided into two main parts:

  • Franchise Fee

This is the upfront cost of joining the franchise system. It's paid when you sign your contract and it typically includes things like training, ongoing support and marketing materials.

  • Royalty Fee (also known as "monthly draw")

This is an ongoing payment that you make to the franchisor on top of your other business expenses each month. It covers things like royalties from sales made by your staff, advertising costs and legal fees associated with running your store or office

Cost of franchise.

You can also consider the cost of a home-based franchise, which is much less than premise-based. The reason for this is that you won't have to pay rent and utilities, as well as other expenses like insurance and payroll taxes. However, you'll need to make sure that your home is suitable for running your business from it: Does it have enough space? Is it safe?

In general terms, franchise costs are going to depend on whether or not you choose a home-based or premises-based franchise opportunity. Most people choose premises-based franchises because they know exactly what kind of location they want before making their decision; however, others prefer the freedom of being able to work from anywhere with an internet connection (and maybe even earn extra income).

Conclusion

So, what does this mean for you? Well, if you're considering buying or selling a home-based franchise, the total cost will be lower than one that has premises. However, that doesn't mean it's always better to go with a home-based business. You should think about how much time and effort it will take to run your own operation versus working within an existing company's structure before making your final decision on which type of franchise would suit best!

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