Initial Investment
Franchisors typically tell you upfront what you should expect to invest to get your business running. They may require that some percentage of this initial investment is in liquid assets, such as cash and short-term bonds, so you don’t get too deeply into debt establishing your new business.
If you don’t need to lease, purchase, renovate or build property to run your business, you may be able to get away with an investment of less than $10,000. This makes franchises that allow you to work from home or on the road a good option for entrepreneurs with limited capital and assets. On the other end of the spectrum, if your dream is to open your own hotel franchise, expect to spend $5 million or more to purchase the property and build on it.
Most franchises fall somewhere between these extremes. The cost of leasing or building an operating facility varies based on the property costs in your location, but many costs are fairly standard across locations, so you can use the franchisor’s resources to budget for these costs.
You may already be budgeting for anticipated physical costs, such as refurbishing the property, stocking it with equipment and supplies, and updating signage and branding, but also keep in mind the labor and service costs of starting a new business. Insurance, legal, and accounting services are essential for many successful franchises, and don’t forget to budget for initial employee recruitment and training costs.