Franchising Advices

What Kind of Capital Do I Need to Start a Franchise?

The initial investment you may require will run to anywhere between four and seven figures, although sometimes all initial expenses are covered by the franchisor. On average you will have to factor in money for the following expenses:

Initial Franchise Tax – for the right to use the brand and the business model of the franchisor and for initial training

Monthly Royalty Tax – most often deducted as a percentage of the turnover, but sometimes a fixed sum and infrequently not charged at all

Advertising Tax – the monies set aside for the marketing budget and for advertising the commercial brand

Additional Investment – for instance, money invested in refurbishing the premises, buying equipment or initial stocking of the shop/outlet.

Every franchise has its specificities. Some don’t require the payment of an initial tax. Others may want you to have retail space. Yet others stipulate that you buy certain products from the franchisor, while a number will not.