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How Much Does It Cost To Start A Franchise?


How Much Does It Cost To Start A Franchise?

The cost of starting a franchise is very different from case to case. Three things should be considered:

  1. The starting fee
  2. The investment requirement
  3. The running fees

Then you have to ask yourself if you will manage to break even with the investment required by the franchisor. Maybe you need to invest more to cover unforeseen costs and delays? Some low cost franchises are very safe and are no-investment-franchises. Those franchises tend not to have as huge and upside but can nevertheless be very profitable franchises.

There are very low fee franchises out there, there are some with relatively low fees and some that have very high fees and require huge upfront investments.

Generally risk is weighed towards return where the rule is that the higher the risk, the higher the return. This is not always the case though. There are many low risk franchises that has an almost certain and stabile return and some of them are also low cost franchises.

To sum it up the costs for franchising vary a lot and can also have unknown variations due to market climate and other unpredictable factors. Considering all this a better question might be what are the costs relative to expected profit? The answer for this question should hopefully be that the costs are strictly correlated to the expected profits but unfortunately that is of course not the case and that takes us to the question of what franchises are the best to own? The answer to that question is very much related to the risks, history and strength of the franchise system, which again has a great impact on how much it cost to start a franchise. The answer is thus not very clear in terms of money but very clear in that the potential should be measured against risk and cost.
 

Anders Östlund

Founder of Fryday, An International Network Of Professionals

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