What Does Franchise Ownership Cost?

Franchising costs money. Here's what everything means.

-  by CLARISSA BUCH ZILBERMAN

Are you looking for the right franchise for you? Once you've settled on a brand you like, it's time to run all the numbers—from one-time costs to all the ongoing fees that come with buying and operating a franchise from day to day.

Although a brick-and-mortar business might require you to secure a storefront and a staff, and an e-commerce company might include software and inventory expenses, there are other costs unique to franchising that every franchisee-to-be should be aware of. While these fees will be clearly outlined in the Franchise Disclosure Document (FDD) that you are required to review before buying the franchise, it's best to know what these terms mean right from the start.

Franchise fees

One of the biggest perks of franchising is buying into the company's pre-existing model, business method, and support systems—not to mention the right to use its trademark. To do that, you must pay what's called a franchise fee. These fees differ from franchise to franchise, but they are typically a one-time payment.