Understanding the cost to franchise your business is an important step in evaluating if you should franchise and selecting the right team and franchise development strategy. When evaluating the cost it’s important to understand that franchising is a “process” that takes place over years and that, in this article, we’re talking about (a) the franchise development stage where you take the legal and development steps necessary to call yourself a franchisor and start selling franchises; and (b) the franchise sales stage where you begin to market and promote franchise sales over the next twelve months.
The cost to franchise your business, generally, ranges from $18,500 to $84,500 for the franchise development stage, and $22,500 to $75,500 for the initial 12 month franchise sales stage. The cost will vary depending on the legal and franchise team that you work with, the industry within which your business operates, the organic reach of your brand, and the aggressiveness of your franchise sales goals. Spending more does not necessarily equate with better success and spending too little may lead to lost opportunity and unintended consequences.
Below we discuss the costs in more detail.
To learn more about franchising, the costs involved, and how to get started, give our team a call at (800) 976-4904 or by email.
The franchise development stage is the stage where you go from business owner and entrepreneur to franchisor. Its the stage where you work with a legal team to franchise your business and take the steps necessary to franchise your business, become a franchisor, and start selling franchises. During the franchise development stage, you should consider the following costs:
Total estimated cost to franchise your business during the franchise development stage: $18,500 to $84,500
To learn more about how to franchise your business, and the franchise sales marketing channels visit our Ultimate Guide to Franchising Your Business.
The franchise sales stage comes right after the franchise development stage and, as to many aspects, should be occurring side-by-side during the later part of the franchise development process. Although marketing and selling franchises goes beyond the scope of this article, its important that when you consider the cost of franchising your business you include a franchise sales budget for the first 12 months. Knowing how much you need to invest in franchise sales will, largely, be determined by the industry you operate in, the number of organic qualified prospects (i.e., existing customers and contacts) that are already interested in buying your franchise, the internal marketing capabilities of your own team, and, most important, the number of franchises that you want to sell.
Assuming that you are in a favorable industry that is not oversaturated and assuming that you have a realistic franchise sales goal of 5 new franchise sales (i.e., not sales to your existing organic contacts), you should consider the following aggregate costs over the initial 12 months:
Total estimated cost to franchise your business during the franchise sales stage (first 12 months): $22,500 to $75,500
Keep in mind that we are talking about a modest goal of on-boarding 5 new franchisees that are not already contacts in your funnel and that this is only an estimate. We’ve seen start-up franchisors sell far more with much less dollars and we’ve seen some brands spend far more without getting great results. You need to be strategic, build the right relationships and work with professionals who will help you avoid mistakes and wasted dollars.
Learn more about our fixed fee Franchise Launch Program. This fixed fee service program combines legal representation + franchise development and covers all of the steps involved in developing your franchise offering. if you have questions about whether or not franchising is right for you read our guide on Should You Franchise Your Business.
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