There are franchise businesses in a variety of price ranges, but 30% of available franchise opportunities can by fully capitalized for under $100,000.
The good news is that there is no correlation between how much you invest to own a franchise and your potential income (<- tweet).? That?s right: in the case of franchising, you don?t exactly get what you pay for.? Your financial performance has a lot more to do with how well you ?fit? with your chosen franchise business , how well you? follow the franchisor?s business system, and how hard you work than it does with what you initially invest.
The total cost varies from industry to industry and is made up of the following types of expenses.
1.? Franchise Fee:? This is a one-time upfront amount you pay to the franchisor in exchange for use of their brand name and trademarks, marketing systems, technology systems, distribution systems ? all the moving parts that make the business work.
2.? Construction: Depending on the kind of franchise you select, you may need to lease and build out a physical location.? All of your furniture, fixtures, and equipment, and signage are included in construction costs.? While franchisors can help you closely estimate these expenses, the final cost will depend on the location and other decisions you make.
3.? Inventory & Supplies: Again, depending on your chosen franchise, you may need to stock your shelves with products to sell.? At the very least, you will need supplies to run your business.? Every business is different, so be sure you have a complete understanding of the inventory and supplies requirements before you sign.
4.? Legal Fees: You will want to consult with a franchise attorney, who will help you review the franchise agreement, so you will need to make an allowance for those fees.
5.? Working Capital: The amount of day-to-day cash needed to operate a business varies by model.? If? you don?t have another source of income, be sure to include your living expenses in this number for as long as it takes for the business to generate your desired income.? The franchisor can give you an estimate of how much you will need and how long it should take before the business ramps up.
Tags: FAQ series
Source: http://lesliekuban.com/franchise-advice-cost-to-buy-a-franchise/
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