How much will it cost me to buy a franchise?

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Initial investment, franchise fees, royalties ...

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Buying a franchise may be a worthwhile investment in the long run, but it will take a lot of work, and it certainly isn’t cheap.

Some franchises cost more than others, but regardless of the price, you’ll need to dish out a good chunk of change—anywhere from a few grand to a few million, depending on the franchise—just to set up shop.

What do you get for your money, and why do franchisors require a capital buffer? And why do the costs vary so much from item to item, or franchise to franchise? Here’s what you should know about franchise costs before you begin the vetting process.

If you research franchise costs, you’ll notice they’re generally grouped into four categories: initial investment, franchise fee, royalties, and minimum financial requirements.

1: Initial investment. This is the all-encompassing figure of your total start-up costs. It can include the following:

The initial franchise fee—a one-time payment—is also part of the initial investment, but it’s often listed separately so you can identify its specific cost.

2: Franchise fee. The franchise fee is a one-time payment that you make when you sign a franchise agreement. Think of it as your entry fee to own and operate a franchise using your franchisor’s brand, trademarks, and systems. The cost can range from the low thousands to a figure above the hundred thousand mark. The franchise fee usually covers the cost of training, support, and other resources and services to help you get set up.

3: Royalties. Franchise royalties are regular monthly payments you make to the franchisor. Royalty percentages will vary depending on the franchise, model, and industry, but they can range anywhere from 4% to 20% or more of your revenue. You’ll need to figure out how these royalty fees will impact your overall profitability and cash flow.

4: Minimum financial requirements. Franchisors want to make sure their prospective franchisees are financially stable enough to operate a franchise. The minimum financial requirements will vary depending on the capital intensiveness (i.e., financial riskiness) of the franchise operation. Some franchisors may require you to have a clean financial background (e.g., a high credit score and no personal bankruptcies on your record); others will expect you to have a certain amount of liquid capital or net worth.

Here’s a short sample of popular franchise opportunities and their costs, ranked from highest to lowest. Note that this list covers most, but not necessarily all, of the fees associated with each franchise. (These numbers are current estimates as of 2024, but they’re always subject to change.)

McDonald’s (fast food chain)

Chick-fil-A (fast food chain)

7-Eleven (convenience grocery chain)

Supercuts (hair styling salon)

Kumon (math and reading programs for children)

The Maids (cleaning service)

Cruise Planners (travel agency)

Jazzercise (fitness studio)

Dream Vacations (travel agency)

Now that you have a better understanding of franchise costs, the next step is to make a list of available franchises in your area that match your capital resources, interests, and goals. Remember that the last part (your goals) is super important. Whether you’re looking to scale up and build a local “empire” of fast-food joints, leave a legacy of franchises for your children to operate, or simply start your own business, your goals will often define your strategy, resource needs, and limitations.

The samples above barely scratch the surface in terms of your choices. As of 2023, there are more than 806,000 franchise establishments, serving more than 3,000 active brands, in the United States alone. This means you have a lot of homework to do to find the right match. Take your time, talk to other franchisees if you can, and be sure to read the Franchise Disclosure Document (FDD) before you sign anything.