Most people would rather tell you the color of the underwear they’re wearing than reveal how much money they make – or how much they have to invest! Yet, the question of how much a franchise costs will invariably arise and be measured against what a franchise candidate wants to invest.
The good news about franchising is that the investment is clearly spelled out in a legal document, called the Franchise Disclosure Document, or the FDD. The franchise fee is a set, one-time cost, while other things will be listed within a range. For example, marketing and build-out costs are often higher in a major city. So, people living in say, New York or San Francisco would look at the high end of the cost range.
The FDD must disclose other fees, like royalty and advertising fees the franchisee will pay throughout the life of their franchise.
More good news. When you talk with existing franchisees as part of the validation process, you can also ask about the investment they made to start the business and verify everything that is in the FDD. There should be no surprises! Curious to know more? Call me at 1-925-642-9976 or shoot me an email at [email protected]