Like any new business, there are one time and recurring costs that you’ll need to cover as you launch and grow your business. With a franchise, many of these costs come in the form of fees. The nice thing about these fees is that they are scheduled and laid out in advance, so you can be very deliberate with your financial planning.
Most franchisors require that franchise candidates meet certain fiscal requirements. Typically, they set liquidity and net worth minimums, which will vary from brand to brand.
A franchise lawyer and a business accountant are two critical partners you’ll need as you embark on your franchise journey.
All franchisors charge fees in exchange for a host of benefits you’ll receive as a franchisor. Many brands offer discounts for veterans, minorities, and women. And some offer discounts for new franchisees. VetFran and the IFA’s Women's Franchise Committee are excellent resources for veterans and women interested in franchising.
If you invest in a franchise concept that requires a brick-and-mortar location, you’ll need to factor in building costs. If you’re investing in a retail concept, material costs will come into play. And nearly every concept will require certain equipment.
In addition to the costs and fees outlined above, there are additional costs that you may need to consider depending on your franchise investment. You can review all costs and fees in the FDD, in item 21. Although costs and fees may at first feel like a deterrent, it’s important to remember that these are all costs you’ll need to pay if you are starting a business on your own. The difference is that when you invest in a franchise you have the full support and guidance of the franchisor and the franchisee community, plus the brand recognition of an established business.