How Much Will It Cost to Franchise My Business?

In today’s economy, most business owners are very cautious about how they spend their money. As you’ve discovered in calculating your Return on Investment, franchising can be very rewarding financially. However, your research may disclose that most major development companies charge $75,000, $100,000 or even $150,000 just to prepare your documents and training manuals.

There are a number of other costs involved in developing a franchisor depending on your first year goals. Here’s a list of the costs typically encountered by a start-up franchise system. We have included estimates of costs that are often quoted in the industry as well as the amounts that The Franchise Doctor feels are realistic if you’re cost-conscious.

Typical First-Year Costs When Establishing a New Franchise System

Item Range Recommended
A Feasibility Study to evaluate the amount of competition and establish the probability for success of the new franchise system. $3,500- $7,500
*
In order to comply with Federal Regulations regarding the sale of franchises, every company must prepare a document known as the Franchise Disclosure Document and a Franchise License Agreement.  $20,000-$35,000 
*
You must prepare the training manuals and materials that you will use to teach new franchisees how open and operate a successful clone of your business. $15,000-$50,000 
*
Creating a Franchise Marketing Plan and Developing a Discovery Day Format $7,500-$15,000 
*
Franchise Sales Training. (Teaching your staff how to complete unit sales within the government’s guidelines.) $10,000-$20,000 
*
State Registrations Federal Registration is free but 14 states have special registrations with fees ranging from $250 to $750. There are also additional legal fees incurred for these filings. $15,000-$25,000 
$1,500
If you do not have a Federally Registered Trademark, you should apply for that soon. $1,750-$7,500
$1,750
Your Franchise Disclosure Document requires that you submit basic financial information about your company. $1,500-$10,000
$2,000
Some franchisors choose to establish a new legal entity to be the franchisor. $0-$13,500
$0-$3,500
Advertising for Franchise Buyers. This will vary based on your goals for first-year sales. $15,000-$120,000
$12,500
Additional Staffing: Franchisors content with selling 5 to 10 units in their first year can often handle the growth without additional personnel. Those with higher expectations, may choose to hire a Franchise Development Manager, a trainer and additional support staff. $0-$200,000
$0

* The Franchise Doctor offers a full Turn-Key Development Program (including all stared items) for less than $30,000. With other expenses added, most clients sell their first franchise unit before spending $35,000 to $37,500.

We’d be happy to discuss our basis for these estimates with you.

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