Why a Franchise May be The Right Choice For You

Discusses the costs, benefits, and reasons for success or failure of franchise operations.

Costs:

Obtaining the right to use the franchisors name and its assistance may require several thousand to several hundred thousand dollars. The following is a breakdown of fees involved in operating franchises (Franchising World 2005):

• Initial Franchise Fee and Other Expenses - This is the initial franchise fee, which may be non-refundable, and includes other costs such as:

• Business or operating licenses and insurance

• Costs to rent, build, and equip an outlet and to purchase initial inventory

• Grand opening or other initial business promotions

• Product or service supply costs

• Real estate and leasehold improvements

• Training costs Financial and accounting advice

• Legal fees

• Discretionary equipment such as a computer system or business alarm system

• Advertising fees- Franchisees may have to pay into an advertising fund, with some portion of the advertising fee going for national advertising or to attract new franchise owners, but not to target the franchisee’s particular outlet... Read more>>