If you were planning to get a franchise in the near future then you are at the right spot to get more familiar with the issues that considers purchasing a franchise. There are many people who want to own a franchise but they need to calculate the cost of the franchise first. It can be risky if you overlook some factors. Not every franchise is the same and there are many companies calculate various types of cost for each and any. If you are interested in buying a restaurant franchise there are some companies who charge you common costs for a franchise. This is first of all franchise fee, contractor fees, all build-out costs, professional fees, your inventory and the signage. It is important to know that there must be sufficient working capital to open and do business until the company is running to maintain the costs for it self. Let's take a moment to talk about common costs that come along with buying a franchise.
Franchise fee is one of the costs.
If you buy a franchise then the franchise giver will ask you for a franchise fee. The fees are for the training, site selection and support. The included benefits or items are for paying the franchise fee is different from one franchise giver to another. In some cases these are only the licensing fee which offers the owner to use the name of the company. It is wise to calculate what the return on investment is when you pay a franchise fee.
Usually the fees can cost you around $20,000 to $50,000. If you want a McDonald's franchise the fee is around $45,000. There are some cases the fee can be lower than $20,000. Home-based franchise or mobile franchise can be lower.
Accounting fees and legal fees.
First of all if you are thinking about buying a franchise then getting advice from a professional franchise attorney can be a good choice to lower the risks. This person can help you to give you a review of the Franchise Disclosure Document. This is better known as FDD. They can help you to understand the franchise agreement better. There are no fixed fee to pay the attorney, in certain cases you have to pay $1,500 to $5,000 to get help from a franchise attorney. The fee amount depends on how much time you need to talk to the attorney.
It is essential that you keep a clear and proper record from the very first start. If you hire an accountant then you can track how much a meeting is going to cost you. This will ensure you that you do not pass the budget boundaries of your legal fees. Hiring a professional accountant can give you a secure piece of mind when it comes to having enough working capital.
Working capital.
The money you have is called as the working capital. This money amount is you will need to cover for a certain period of time. The time period can be two to three years until the business start to return on investments. If you want to buy a McDonald's franchise it requires a $750,000 working capital amount.
The franchise giver will calculate the amount you need to open your own franchise business. It is wise to do your own research based on your market and not based on system averages.
Build out costs.
Build-out costs vary from one franchise to another. When the location is found and you decide to go for it then once the franchise company approves it then you can calculate the build-out costs. This includes equipment, furniture, signage nd fixtures. It also include the fees for architectural drawings, contractor fees, security, landscaping and insurance. The home-based franchise does not require any build-out costs.
Supplies.
Without proper supplies you can not run your franchise. That means that you have to have the right supplies like everyday things to have your business running properly.The franchise giver will give you a clear list what you need to run your own franchise business. This amount depends on what type of franchise you want. You might think that this will cost you around $100,000 is most cases.
If you are set to buy a retail franchise or any other franchise type that sell products then you need an inventory to stock up. Not every franchise is the same and it has various requirements such as different stock. You will be needing around $20,000 to $50,000 worth of inventory depending on the franchise type.
Training expenses.
Franchise giver organizes training for franchise takers and at least one employee. Attending a training is one of the requirements. This training is mostly covered by the franchise fee. If there are traveling and living expenses then you as the franchise taker have to pay for it. These costs depends on the location and what the needs are of the specific individual.
As you now might know that taking a franchise is a long journey that need to set up properly. If you want success then you need to realize that there are many factors that involves taking a franchise. There are many financial factors that come into play. If you want to buy a McDonald's franchise then you will need an amount of $900,000. With proper research and realistic goals you can ensure a franchise of your choice if you are interested.
Original article source:EzineArticles.com
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