Franchise Costs

The disclosure document tells you the costs involved to start one of the company's franchises. It will describe any initial deposit or franchise fee, which may be non-refundable, and costs for initial inventory, signs, equipment, leases, or rentals. Be aware that there may be other undisclosed costs. The following checklist will help you ask about potential costs to you as a franchisee.

• Continuing royalty payments.
• Advertising payments, both to local and national advertising funds.
• Grand opening or other initial business promotions.
• Business or operating licenses.
• Product or service supply costs.
• Real estate and leasehold improvements.
• Discretionary equipment such as a computer system or business alarm system.
• Training.
• Legal fees.
• Financial and accounting advice.
• Insurance.
• Compliance with local ordinances, such as zoning, waste removal, and fire and other safety codes.
• Health insurance.
• Employee salaries and benefits.

It may take several months or longer to get your business started. Consider in your total cost estimate operating expenses for the first year and personal living expenses for up to two years. Compare your estimates with what other franchisees have paid and with competing franchise systems. Perhaps you can get a better deal with another franchisor. An accountant can help you to evaluate this information.