What Is a Franchise Fee?
If you're investigating franchises, you'll definitely be reading about franchise fees. Find out what they are and why you'll need to pay them.
Posted 8/ 3 10 at 10:35 AM | Franchises
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A A AWhat is a franchise fee?
If you've ever thought about buying into a franchise but haven't yet explored your options, you may well have wondered this, since it's a term that comes up again and again. So here's the short answer: A franchise fee is the cost of joining a franchise.
A slightly longer answer: When a business decides to franchise, it's usually and hopefully after the entrepreneur who started the company spent years tinkering with his or her formula. He or she expended the proverbial blood, sweat and tears to get the business model right, so when you pay to join the franchise, if the fee -- which can be in the tens of thousands of dollars -- seems really high, you're correct. It is high, which isn't to say that it's too much or that you're being gouged. From the entrepreneur's perspective, he or she did a ton of work to get that business model just right. You're paying to avoid the risk of starting a completely new business model and possibly crashing and burning.
And for your franchise fee? You'll get the right to put the franchise name and logo on your building, and you should receive training, an operating manual and plenty of ongoing advice and insight from the franchiser. Then there are royalty fees as well, which are ongoing. These fees on top of other fees can be steep, but people buy into McDonald's, Subway, Jiffy Lube, and a gazillion other franchise models all the time. Most business owners who like the franchise model will tell you it's worth it.
If you're interested in franchise fees, you may also want to read ...
If you've ever thought about buying into a franchise but haven't yet explored your options, you may well have wondered this, since it's a term that comes up again and again. So here's the short answer: A franchise fee is the cost of joining a franchise.
A slightly longer answer: When a business decides to franchise, it's usually and hopefully after the entrepreneur who started the company spent years tinkering with his or her formula. He or she expended the proverbial blood, sweat and tears to get the business model right, so when you pay to join the franchise, if the fee -- which can be in the tens of thousands of dollars -- seems really high, you're correct. It is high, which isn't to say that it's too much or that you're being gouged. From the entrepreneur's perspective, he or she did a ton of work to get that business model just right. You're paying to avoid the risk of starting a completely new business model and possibly crashing and burning.
And for your franchise fee? You'll get the right to put the franchise name and logo on your building, and you should receive training, an operating manual and plenty of ongoing advice and insight from the franchiser. Then there are royalty fees as well, which are ongoing. These fees on top of other fees can be steep, but people buy into McDonald's, Subway, Jiffy Lube, and a gazillion other franchise models all the time. Most business owners who like the franchise model will tell you it's worth it.
If you're interested in franchise fees, you may also want to read ...
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