How Much Will It Cost to Franchise My Business?
If you’re considering growing your company with Other People’s Money, franchising is your best solution. Finding a franchise development company that can get you on the right track for a reasonable cost is critical to your early success.
As an entrepreneur, you must be cautious about how you spend your money. As you calculate your Return on Investment, you’ll find that franchising can be very rewarding financially. Your research may also 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
| Service | Competitor Pricing | The Franchise Doctor’s Fees |
|---|---|---|
| A Feasibility Study to evaluate the amount of competition and establish the probability for success of the new franchise system. | $5,000- $7,500 | $5,000* |
| Franchise Disclosure Document and Franchise License Agreement. Needed to comply with Federal Regulations regarding the sale of franchises. | $20,000-$35,000 | $17,500* |
| We will prepare the Operations 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 | $9,500* |
| Creating a Franchise Marketing Plan and Developing a Discovery Day Format | $7,500-$15,000 | $5,000* |
| Franchise Sales Training. (Teaching your staff how to complete unit sales within the government’s guidelines.) | $10,000-$20,000 | $3,000* |
| 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. | $2,500-$7,500 | $1,250 |
| Your Franchise Disclosure Document requires that you submit basic financial information about your company prepared by an independent accounting firm. | $5,000-$10,000 | $1,500 |
| 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 up 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 |
| TOTALS | $100,000-$500,000 | $45,000 Maximum |
* The Franchise Doctor offers a full Turn-Key Development Program (including all stared items) for $40,000 to $45,000. With other expenses added, most clients sell their first franchise unit before spending $47,500 to $52,500.
We’d be happy to discuss our basis for these estimates with you.