Franchise Start Up Costs

The franchise is normally an investment opportunity for the franchisee. He can add up the number of stores to increase his profits. The success of the franchise is determined by the franchisor and vice versa. The opportunities of a franchisor are great compared to any employee because of the great incentives involved and direct stake for the work. There are different categories for different franchises: small, medium and large franchises. Small franchises include fast foods.

Midi franchises include restaurants, gas stations, truck station which have substantial investment and need a lot of attention in order to succeed. Large franchises include big hotels, hospitals, and spa and so on.

The franchise start up costs entail two kinds of payments which are

  1. Royalty for the trademark
  2. Advisory and training services that are offered to the franchisor.

The two franchise start up costs can be paid at once.

Once the agreement has been made, there is no turning back since it has serious consequences to the franchisor. The duration of the agreement normally ranges from five to thirty years. It is normally a temporary investment which involves renting out opportunities without the purpose of ownership.

There are some formalities you will need to follow to start up a franchise. They include:

  • The federal trade commission requires the franchisor to prepare a certain documents for the operation to go on if they want to sell in the United States. You need to hire a lawyer to help you go through the legal requirements. You need to check the lawyer’s profile before hiring one.
  • You need to make audited accounts for the company before the start up. This requirement is very important for the start up of the franchise. You need to hire an accountant to produce the audited accounts and advise you on matters involving accounts.