Buying into a franchise can be a great option for those who are looking to start their own business from the ground up. Starting your entrepreneurial journey with a franchise does not necessarily mean an easier path, it just means you walk in with an established brand and structure already in place. In terms of the time and money you will ultimately spend, buying into and starting a franchise will be just as much work as starting a business on your own.

What are the major expenses involved in starting a franchise?

The first cost you will incur will likely be the franchise fee. Franchises charge this upfront fee as a way of recouping the costs of training, branding and the support they will provide. The average franchise fee is somewhere in the neighborhood of $30,000, but they can range from less than $10,000 to over $100,000. The franchise fee will depend on the size of the franchise you are buying into, and each individual franchise will have specific requirements to become part of the brand.

There may also be costs related to setting up a location. You may have rent payments and may have to pay for things like landscaping. You may need to have signs made, install new equipment and fixtures, buy new furnishings, and build-out a space.

Any new business will also need to bring in an initial inventory and purchase supplies. There may also be operational needs like advertising and payroll, so you will need to be certain that after all of your starting costs are covered, there is still enough capital left to cover your additional expenses until you are able to turn a profit.

How can you be sure that you have enough to get your franchise up and running and keep it running until a profit starts coming in? Ask questions, lots of questions, during the buying process. You will need to have at least a general idea of how much time per week you will need to work, and how much income you can expect to bring in if all goes well.

Does starting your own franchise location sound a little daunting?

If you are looking for the benefits of owning a franchise without the risk of creating an unproven location, then perhaps buying an existing franchise location is for you. Like with the purchase of other existing businesses you will be getting a turn-key, currently operating business with everything from build-out, staff and operating procedures already in place. The difference with a franchise location is you will need to pay a franchise fee to join the brand – but if you are looking for a business with instant name recognition and a well defined structure already in place this might be the path for you. Ask your business broker about the costs versus benefits of buying an existing franchise location or starting one from scratch.

Does buying a franchise seem like the right path for you, but you have additional questions? Would you like to know what franchise locations are currently for sale in your target area? Ask us! Leave a question or comment here and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com