- Owning a franchise comes with expected and unexpected franchise costs.
- Franchise fees are used for a variety of things like startup costs, rights to the brand, training materials, and required items from the franchisor.
- Reach out today so you can begin your journey to owning a Preservan franchise.
If you’ve ever thought about owning your own business, franchising is a great way to start. You are able to get your foot in the door and see if entrepreneurship is right for you. Franchising allows people to own and operate a business under a pre-established brand. This offers a middle ground between entrepreneurship and working for a company. Owning a franchise combines the benefits of business ownership with the security of an established model.
What Is A Franchise?
To begin, you may be asking, what really is a franchise? A franchise is a business arrangement where a franchisor grants a franchisee the right to operate under its brand and system, in exchange for fees and royalties on the products sold. Owning your own franchise allows you to benefit from the brand’s operational expertise, marketing power, and brand recognition. Franchisees (YOU!) get to be their own boss while still being able to have support from the parent company.
Examples of franchises
We can start by talking about some franchises you most likely have near you. Most national or even world-wide fast food joints are run as franchises. Your local McDonalds is most likely run or owned by McDonald’s CEO. Most locations are examples of franchises, owned by people in your area. Preservan is also an example of a franchise. Preservan is a home services and handyman franchise that offers extensive support and brand power.
Other popular examples include:
- Ace h\Hardware
- Dunkin Donuts
- Taco Bell
- 7-Eleven
- The UPS Store
What Are Franchise Fees?
There are a few franchise costs that go into owning your own franchise. Franchise fees are one-time payments that will grant you a license to operate your franchise under the franchisor’s brand and system. These fees will allow you to use proprietary systems, branding, training, and operational procedures.
What’s Included With Franchise Fees?
Franchise costs, or fees are things that will end up helping you get started with your business. The franchise costs give you access to the business model, as well as operational manuals, and more. This will also cover any initial setup support you may need like the site approval, grand opening phase, and the market introduction program. This franchise cost is one of the most crucial to your success, without these costs it would be hard to get started and could potentially ruin your chance at running a successful franchise.
Franchise Initial Fees
Let’s begin with a few franchise costs, starting with the franchise initial fees. The initial fees when starting your new franchise is only one part of the total startup cost. The franchise costs will include inventory, l fees, and equipment. The total investment to start your own franchise could potentially be higher than just the franchise fee. Depending on the industry you buy into, franchise costs can get up to $175,000. Franchise initial fees will encompass the real estate, professional services (like the accounting and legal services), and insurance.
Royalties
The next franchise cost you will encounter is the royalties. Royalties are a franchise cost that will be paid monthly or weekly to the brand. This is a percentage of sales, usually ranging from about 4-12% depending on the franchise. Higher volume franchises could face lower royalties, and lower volume franchises could face higher percentages. Royalties are the main source of income for franchisors and will help to fund other franchises and system development.
Advertising/Branding
Other franchise costs you will run into are the advertising and branding costs. This franchise fee usually requires contribution to a regional or national advertising fund, typically about 1-4% of gross sales. Some franchises may also need to invest in local marketing initiatives, depending on your area. Franchisors might also require you to purchase only approved branded materials which could again, add to the overall franchise costs. However, this is a crucial part of branding. By having strong brand recognition, it will allow your franchise to thrive in the local markets.
Training Programs
Training programs are another franchise cost you will run into when first starting your franchise. New franchises will need initial training programs to help operations flow smoothly and in alignment with the brand’s values. This is a franchise cost that not a lot of people account for when looking to start their own franchise. Some ongoing support and training are usually a part of the franchisor-franchisee relationship. Preservan, for example, provides extensive initial training and development for its franchisees.
Additional Franchise Fees
Next, a franchise cost you will likely encounter is simply additional franchise fees. Franchises could be held responsible for costs like covering software subscriptions, required equipment, and system upgrades. Many systems include required purchases of the materials and tools that match the brand’s standards. Another common thing to see in franchise costs are the minimum spending requirements for market introduction programs.
Unexpected Repairs/Emergencies
Franchise costs that are important to factor into your budget are any additional, unexpected repairs or emergencies. It is normal for franchises to be expected to budget for emergency repairs and market fluctuations. This is an integral part of not just owning a franchise but owning any business. One word of advice is to always be prepared! Working capital is best reserved for these franchise costs especially during the early stages.
Ongoing costs
The last franchise cost we will go over together is the ongoing costs to run the franchise. The franchise costs beyond marketing, royalties, and training are things like: employee wages,benefits, insurance, continued training,system updates, utilities,location management, and more. Franchise costs go hand in hand with franchise ownership. It is a long-term financial commitment that will require careful budgeting and planning.
Own a Preservan Wood Rot Repair Franchise
A great franchise opportunity is characterized by a mix of brand recognition, support systems, and the freedom for franchisees to apply their entrepreneurial skills. For those considering a franchise, the Preservan franchise opportunity presents a great opportunity. As you explore the landscape of franchise options, aim to minimize risk and maximize support, ensuring a fulfilling and successful entrepreneurial journey. Choose the right opportunity, seize it, and embark on your journey to franchise success.
Looking to start a franchise in your state? Look no further than Preservan! If you would like to learn more about the Preservan Franchise, then visit our website to view our FAQs, current locations, testimonials and how to get started. Send us a message online to learn more about our franchise opportunity. We look forward to hearing from you!
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