Franchising.com:

You have to spend money to make money. So the old saying goes.

In franchising you can spend a lot or a little, and still make money. Once you’ve decided 1. that you want a franchised business, and 2) what industry segment you’d like to work in (fast food, home repair, pet care, etc.), it’s time to determine what you can afford. Your “budget” will limit your choices.

The cost of entry varies greatly, by both the segment you choose and the franchise brand you select within that segment. While costs range from less than $10,000 to upwards of $5 million, the majority of franchises run from about $50,000 or $75,000 to about $200,000 to get started.

Knowing how much you have to invest at the front end for the franchise fee and to set up your operation – whether a retail store with inventory and staff, or a home-based or mobile business with just one employee (you) – allows you to focus realistically on which industries and which brands to consider.

At the low end, you can get into a home-based or mobile concept for $10,000 or less. At the high end are hotels, which can cost more than $5 million, including the land. Full-service restaurants run from about $750,000 to $3 million or more. Fast food restaurants cost from about $250,000 to $1 million and up. Auto repair and maintenance facilities run between $200,000 and $300,000. Note these are average ranges, and the cost of entry will vary from brand to brand.

Even before you sign a franchise agreement, you will incur costs such as professional fees (an attorney to review the contract and an accountant to work the numbers). And before you open, depending on the type of business you choose there will be costs for building out your store or office, inventory, equipment, insurance, employee training, business licenses, rent, landscaping, signage, etc. Buying your own real estate can be a significant, separate expense. Also be prepared for grand opening and initial advertising and promotional expenses. After you open there ongoing expenses such as interest (if you have a loan), supplies, salaries, professional fees, rent, utilities, maintenance, uniforms, and more. Continue reading.

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