Question 1

What is the total cost to buy a franchise?

Accepted Answer

Franchise total investment includes: initial franchise fee ($10,000–$75,000), build-out or equipment ($50,000–$400,000), working capital ($20,000–$100,000), and training/grand opening costs. The FTC-required Franchise Disclosure Document (FDD) Item 7 lists all estimated initial investment ranges.

Question 2

What are ongoing franchise fees?

Accepted Answer

Ongoing costs include: royalty fee (4–12% of gross revenue, typically 5–8%), marketing/advertising fund contribution (1–4% of gross revenue), technology fee ($100–$500/month), and required supply purchasing through approved vendors (often at above-market prices). Total ongoing fees often represent 10–15% of revenue.

Question 3

Is buying a franchise more profitable than starting from scratch?

Accepted Answer

Franchises have a lower failure rate (~20% fail in 5 years vs ~50% for independent startups) due to brand recognition and proven systems. However, higher upfront costs and ongoing royalties compress margins. Franchises work best for operators who value a proven playbook over building equity in an original brand.

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