Franchise Costs: What's It Really Going To Cost You?

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There are many differences between buying an existing business and purchasing a franchise. While you usually only have the purchase price and some startup capital when purchasing a business, there are quite a few franchise costs that you need to take into account when looking into purchasing a franchise.

The Franchise Costs To Consider Are:

1. Initial Franchise Fee
   Every franchise has it's own initial franchise fee.Ranging from about $10,000 (for home based and internet franchises) up to over $1 million (McDonalds franchise, Krispy Kreme franchise and other famous fast food franchises).
    
2. Setup/Build Costs
   The initial franchise costs are only for the setup of the business systems that make the franchise unique. They do not include the capital required to set up a shop front and purchase the required office machines.
    
3. Legal Fees
   You will need to employ the services of a qualified solicitor that has experience with franchise contracts.
    
4. Ongoing Royalty Fees
   As you are paying for a system. Each franchisor will require for you to pay an ongoing royalty fee.
   
   
5. Running Capital
   You are not going to be making money right off the bat, so make sure you have some capital sitting ready, to cover expenses until the money starts to come in.

The initial franchise costs is the main costs that potential franchisees consider. With 1,000's of franchises available how do you go about selecting the right one for you?

Well one of the easiest ways is to find ones that first fit your budget. If you have around $1million dollars to spend on initial franchise costs and construction costs then you may want to consider a McDonalds Franchise or a Krispy Kreme Franchise.

However, chances are that these might be a little out of your price range and if you are looking for something that is on the lower end of the budget specktrum then you may want to consider a car wash franchise or some form of Jim's Franchise (if you are from Australia) - which you should be able to get for a startup cost of about $20,000.

The main thing is to find a franchise that suits your budget and it is important to consider all the franchise costs that each franchise has so that you are aware of them and are able to include them into your budget.