Franchise Investment: What Does it Cost?
A franchise is part investment, part business venture, depending on your goals.
The investment aspect of franchising refers to the initial capital needed to purchase a franchise. While the cost can be high, once you acquire the franchise, you gain ownership and responsibility for managing and operating the location.
There are three big costs to consider when it comes to franchising:
This is the one-time payment a franchisee makes to the franchisor upon signing the franchise agreement. This fee grants the franchisee the right to use the company’s brand, products and intellectual property. Franchise fees are typically between $15,00 to $50,000 on average.
These are the expenses involved in setting up and launching your new franchise. Initial investment requirements may vary greatly from franchise to franchise. Some franchises can be started with less than $20,000, while others may cost millions of dollars to open. Generally, service-oriented franchises have lower costs compared to retail or food franchises due to factors like real estate and construction expenses. The average franchise business requires an investment of $150,000.
Ongoing franchise fees include advertising expenses, marketing fees, royalty fees, and branding costs. Franchise companies charge royalty fees in exchange for a variety of benefits provided to the franchisee. Usually, the royalty fee is calculated as a percentage of the total revenue. Therefore, as the franchisee’s business generates more income, the royalty fee also increases. Usually, these fees range from approximately 5 percent to 10 percent of the total revenue.
Before considering franchise ownership, you will need to have sufficient initial capital and a solid overall net worth.
Due to the time it takes to start generating profits, most franchisors require you to maintain a minimum level of liquid assets to handle any expenses that may arise during your first year of operation.
Franchisors have specific net worth requirements you must meet to ensure that you are financially stable enough to launch a business successfully.
A Primo Investment for a Primo Franchise
provides an opportunity for aspiring entrepreneurs with affordable entry costs and reasonable expenses for establishing a business. By paying a franchise fee of $15,000 to $40,000, you gain exclusive rights to use the brand name and business model. To buy a franchise with , you will need to have a minimum net worth of $425,000. Franchisees can expect to make a total investment of $246,350 - $612,663. With a commitment to using only the finest meats, cheeses, and fresh baked bread, brand recognition and comprehensive support, you'll have everything you need to succeed as a franchisee.
If you’ve been considering investing in a gourmet sandwich franchise business, let’s talk!