Opening a franchise is a great business venture because all of the prep work has been done for you. Any business that is looking to expand into new markets—or to open another location in an existing market—will consider the public franchising model at some point.
What is Franchising?
Public franchising is an opportunity to take an existing and established business and run it yourself. Often known as “chains” these businesses are located all over the area or across the country and typically resemble each other. They point of a franchise is that customers get accustomed to the product or service offered no matter the location.
Restaurants are the most common type of franchises. McDonald’s, actually, helped to establish the success and profitability of this business type, quickly establishing the fast food trend that has expanded to the industry we know today. Each McDonald’s is owned by a different franchise owner, typically, who probably paid a setup fee and then monthly or annual royalties to the Franchisor.
What Does a Franchise Cost?
What it costs to start a franchise depends largely on the company. On the low end, a home-based or mobile franchise might cost only about $10,000 to get started. Bigger businesses, though, could have startup costs like:
- Auto repair or maintenance facilities: $200,000 to $300,000
- Fast food restaurant franchise: $250,000 to $1 million
- Full service restaurant franchise: $750,000 to $3 million
- A high end hotel franchise: upwards of $5 million
But even before you pay this initial startup fee, there are other costs associated with starting a franchise. You may also have to account for a variety of other costs to build your store, office, or other business. Additional Ben et Florentine franchises fees could include things like:
- office space
- machinery and other equipment
- employee training
Overall, franchise fees (on top of startup costs) run, on average, between $20,000 and $30,000. In some cases—at the high end—franchise fees can total $100,000.
Finally, you need to know that you must also pay royalties to the Franchisor. These typically range between 4 and 8 percent of all gross revenue.