How Much Does It Cost To Franchise A Business?

Howdy Everybody!

As you may know, I recently had the opportunity to attend the International Franchise Association’s annual convention.  Did I mention it is jam-packed with about a gazillion opportunities for education and networking?!  There were so many great presentations, panels, and roundtables on a myriad of relevant topics, it was hard to decide which to attend.

Because of all these topics, I’m sure there are many perspectives on key takeaways.  I thought I’d share my personal top takeaway with you since it is not only something I heard over and over at the convention but also something I learned from my involvement with the family business, M&M Food Market (formerly M&M Meat Shops).  And it comes up regularly with my clients as they work on growing their business through franchising.

Ready?  Here it is!  And once again, it’s not rocket science folks, but entrepreneurs and business owners better listen up!

In order to implement the franchise model, you need to be prepared to invest capital!

Unfortunately, it is hard to give an estimate here, as it depends on the industry and type of business you are in, but the initial capital investment could easily be a minimum of $40K and could be as high as $200K.  This includes everything from legal costs to franchise operations manuals to making sure your brand is “franchise ready”.

And then there are the on-going costs of franchising.  The ultimate goal is to leverage your franchisee’s investment to grow the business, but in the earlier days, there isn’t yet the brand recognition, economies of scale, operational systems figured out, etc., so there will be some capital required in addition to what you will be taking in from franchise fees and ongoing royalties.

It is a common mistake to think that selling franchises will cover the cost of the conversion to franchising.  According to various industry experts, I had the opportunity to talk with, it can easily take 5 years from the first franchise sold to start to be profitable.  And that is if you do most everything right!  Make some serious mistakes and it will take even longer.

If this ‘gets your wheels turning’, and you need some help assessing your capital investment to franchise or grow your business, let’s connect!  You can reach me by email at angela@angelacote.com.  Whether myself or other, I strongly encourage you to hire a franchise consultant to assess your concept and help you avoid making costly mistakes you don’t need to make.

I’d also love to hear your requests for topics you want to hear about relating to business growth and franchising!  Feel free to email me directly.

But until then, go be awesome!