Of course not, but with any new investment comes fees. People try to plan/budget for them, but many fees will seemingly pop up out of nowhere. Luckily, in a franchise model, you know what most of these fees will look like in advance.

Each franchise opportunity comes with its own set of fees, because every opportunity requires different startup costs, investments, and levels of support from the franchisor. Let’s summarize the types of fees you can expect and get you better prepared when you make the leap.

The Franchise Fee

The most typical franchise fee is called – you guessed it – the "franchise fee,". Some franchisees call it the "initial fee" or something similar.

Think of the franchise fee as a cover charge to get fully plugged into the system. This fee allows the franchisor to begin fully supporting you with the full suite of training and tools. The franchisor needs capital as much as you do to get your successful business up and running.

You’ll receive the trademarks, operating systems, franchisor services, and expert guidance once you sign the contracts and pay the franchise fee.

One final note on this. While the franchise fee usually covers all of your training, franchisees will often have to cover their attendance costs (travel and lodging). Budget accordingly.

Marketing

Virtually every new business needs great marketing to succeed. For a franchise, we categorize the two largest marketing fees accordingly:

1. The Grand Opening: Prepare to pay for assistance in the launch of your business Lawyers, accountants, and government agencies must work through the licenses and permissions that will get your business open on paper. A physical building, rent, and equipment will get your business “open” to the point where you can actually start selling the product or service.

In our business, new ActionCOACH Firm Owners host a Grand Opening, usually in a large, social venue. They invite business owners, partners, friends, colleagues, and any "mover or shaker" in the community who should learn more about ActionCOACH.

2. Customer Acquisition: Not necessarily a fee, but a big expense. To expand your franchise brand, you must also determine whether your current fees allow you to acquire customers quickly in your marketplace. Surveys say that 80% of franchisees think that their current marketing fees are insufficient to allow them to compete. How do you work through this besides adding more to your marketing budget? Find the franchise that gives you the resources you need to compete effectively on a national and local level.

Other Fees

You’ll deal with other common franchise startup costs that you’d typically expect when starting a.business on your own.

• General office supplies and equipment
• Industry-specific equipment
• Signage and décor (if not a home-based franchise) I
• Inventory (if needed)

Items 5 and 7 of the Franchise Disclosure Document (FDD) will break down startup costs in great detail.

Sure, nobody likes fees. However, isn’t it great that in a franchise model, you know the vast majority of the fees up front? Fees shouldn’t deter you if you want to own a successful business as long as they’re:

• Well-spelled out in the FDD
• Focused on your early growth and success as a business owner

Have questions about franchise fees within our model? Reach out to us today. Our mutual due diligence process will address every question you can think of.