Franchise Fees, Costs and Royalty Charges

Author: Rob Lancit

Date: NOV 25th, 2014

Topic: Industry Experts

Owning and running a franchise is a unique opportunity that appeals to many people. Becoming the owner of a franchise business offers the potential for a high salary and a quality of life that some people can’t get by working for someone else.

Someone who wants to own a franchise business must come up with start-up fees and can’t start their franchise business without some initial funds to get it going. These fees help to get the franchise business started and provide training to the future owner so they can be successful on their own when the time comes. The fees might also cover website development, special materials required to get started and marketing materials that advertise the franchise.

Often, someone doesn’t have to come up with all the money at one time. Many franchises in Canada allow a franchisee to make a deposit at the beginning of the business venture, with the rest of the fees due once the process is complete and the person is ready to sign the paperwork for their own franchise.

Once a franchisee is ready to be on their own, there are additional costs to owning a franchise and operating a franchise business. That includes wages paid to employees, rent or a mortgage on the facilities where the business is operated and stocking product. Most of the time, a franchisor will assist with this process so that success is ensured.

The amount of money required to operate varies depending on the type of franchise business it is. restaurant franchises or retail franchises may require more initial funds and ongoing payments than other types of franchises. That's because these types of businesses require stock and employees to help run the store. If the franchise can be operated by one person, the money needed to get started is much lower. A bank can often help a franchisee secure the funds needed to get the business up and running.

Ongoing fees include payments to employees, the money required if someone plans to offer credit to the customers, continually replenishing stock and paying for advertising and marketing materials.

Understanding all of these potential costs before making the decision to own a franchise is ideal for being prepared when the time comes to sign paperwork and start writing checks.

Start your research today into a wonderful franchise opportunity.