Why are franchises so expensive

But getting started is also the most dangerous period for new business owners. Now consider that a good franchisor provides startup guidance and solutions that should keep you from making costly errors. A good franchisor tells new franchisees how to select a location and how to hire employees who will be able to do the work of the franchise.

You can hire an ad agency, but have you done that before? Have you negotiated media fees before? Good franchisors already know how to attract customers and they share that know-how with their franchisees. Who can you rely on for equipment, supplies and inventory?

Good franchisors provide an operations manual with guidelines, recommendations and requirements to help you build your business efficiently. If you add it all up, will you pay more or less money to startup an independent business? Suddenly, the franchise fee may look like a bargain. But if the franchisor is buying dozens or hundreds of ads annually in a newspaper, franchisees benefit from the discounted pricing. Same with equipment and supplies, including inventory.

Before you buy a franchise, you can ask the franchisor to show you how your franchise fee will be spent. Ask for a line-by-line itemization.

But drill down. And what, exactly, are you paying for? Are you paying the instructors? We encourage prospective franchise buyers to perform extensive due diligence when considering a franchise opportunity. All Rights Reserved. Legal Notices Privacy Policy. Multi-Unit Franchising.

Franchise Opportunities. Franchise News. Get Started in Franchising. International Franchising. Open New Units. About Us. World Gym Team up with World Gym and become part of our global fitness franchise family. Jomsom Staffing A Jomsom Staffing Franchise is a scalable professional service, business-to-business opportunity in one of the top ten fastest growing industries in Our business model features multiple revenue streams, Perspire has developed, formulated and tested the most superior infrared sauna studio model TruBlue Total House Care TruBlue franchise aims to ease the burden of home upkeep for busy families and seniors aging-in-place.

TruBlue is the trusted name in senior house Magazines Multi-Unit Franchisee Magazine. For new franchise owners, it is not always clear why these large gaps exist. In this post, we will explore what your initial franchise investment goes towards and why some franchises that seem like a bargain may be too good to be true. There are different ways to look at your initial franchise investment.

First, there are the capital requirements that a franchisor sets out for all potential franchise owners. This amount usually includes the investment for the franchise fee and setup costs, plus additional assets like working capital, which will serve to keep the business running up until it becomes profitable. Every franchise, whether a home care franchise or other industry, will have different financial requirements, so be sure to speak directly to a franchise sales associate for the requirements of a specific franchise system.

When we talk about the initial franchise investment, we are going beyond the franchise fee, which is the cost paid directly to the franchisor for the use of the franchise system and related trademarks, etc. Depending on the franchise, the initial franchise investment will include costs such as land, buildings, furniture, equipment, office supplies, and, in the case of retail franchises, inventory. There are some obvious reasons that one franchise might be more expensive than another.

For instance, paying for the construction of a hotel franchise location is going to be considerably more expensive than a home care franchise that requires no construction. However, there are also key differences between different franchises that may not be quite so obvious. Buying a franchise means buying more than just the name of a brand. Your initial franchise investment covers both startup training as well as the cost of ongoing training for you and your staff. The extent of this training can have an impact on those initial investment costs.

Caring Senior Service, for instance, offers ongoing training for its franchise owners.