What is the Cost of Franchising Your Business?

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So you’re thinking about franchising your business and wondering how much it costs. There isn’t necessarily a right answer for this question, but let’s walk through a few different scenarios. First off, let’s remember why you are looking into franchising your business. I would imagine it is because you have a good business that is profitable and would allow for a franchisee to make a decent return on their investment. You may also be considering franchising your business because you are unable to expand through your own cash flow, get a loan through a bank, or find investors that have an interest in your company. Isn’t funny when you look back and you actually thought at some point that you would actually find an investor? Who were we kidding! You may also be franchising because you don’t have the right staff in place for more company locations or need to expand rapidly.

So all of this has led us to the point of franchising a business and now you are wondering what it costs to franchise. Let’s take a look at the initial costs. Initially you are going to need to have a franchise company developed. So you are going to need a franchise business plan, franchise legal documentation, franchise operations manual, franchise marketing plans, franchise brochure, and franchise training. There are a number of ways to complete these items such as doing it all on your own, hiring a franchise consultant, or finding some way to piecemeal the project together. Don’t be fooled by your local attorney telling you that they specialize in franchise law or convince yourself that now all of a sudden you are a master in franchising. It is a highly specialized field and you are far better served connecting with a franchise consultant to help you through this process.

Okay, okay, so what does it cost to franchise already? Generally speaking franchise costs can range from $50,000 upwards to over $250,000 and usually are not much more than your cost to open up another company owned location. Although the initial cost might seem a bit overwhelming, you have to remember that you are building a mold to sell franchises from. After the mold is built you will be able to sell as many franchises as the market can bear. Remember too that you most likely will be asking your franchisee to spend the same amount or more in order to buy your franchise.

Overall, there are many variables that can contribute to your cost to franchise a business such as if you intend to expand internationally, nationally, or regionally. Other factors include your marketing budget, what kind of outsourced franchise service providers you work with, what you already have in place, and other types of operating expenses. I hope this helps to answer your question about what the cost is to franchise a business.