How much does a franchise cost?

The fee is the small part

Ask what a franchise costs and the first number you hear is usually the franchise fee. It is the least useful number to plan around. The typical fee is $40,000. The typical total cost to open, the franchisor’s own estimate of what you will spend to get the doors open and through the first few months, runs from $355,700 to $770,500.

The spread between brands is wide. 18 well-known brands can be opened for $100K or less, while 38 need more than $1M even at the low end of their estimate. One question decides most of it: does the business need a building that customers walk into?

Why the range is so wide

Every franchisor publishes a low and a high estimate, and the gap is often wider than buyers expect. A small site in an inexpensive market, a former restaurant that needs little work or a used equipment package lands near the low end. A large new build in an expensive city lands near the top.

Industry matters more than brand. Home and commercial services, tax preparation, real estate offices and children’s activities are the cheapest to start because the owner works from a van, a small office or the customer’s premises. Restaurants, fitness clubs, childcare centers and entertainment venues sit at the other end because they need a large, specially fitted space before the first customer arrives.

Cost to open by budget

Most brands start between $100K and $500K. The chart groups brands by the low end of their estimate, the least you could expect to spend. Select a band to see those brands in the franchise finder.

What the money pays for

The franchise fee buys the right to use the brand, its operating system and the initial training. It is paid when you sign and is part of the total, not on top of it. The rest of the estimate is the cost of building the business:

• Fitting out a leased space: construction, signs, furniture and fixtures
• Equipment, from a commercial kitchen to gym machines or a work van
• Technology, the first round of stock and supplies
• Lease and utility deposits, insurance and business licenses
• Travel to training and a grand-opening marketing push

Typical cost by industry

Real estate is the cheapest industry to enter, at $37K–$336K for a typical brand. Trampoline park is the most expensive, at $2.33M–$5.18M. Each figure is the middle of the industry’s low and high estimates, and a brand can sit in more than one industry, such as pizza and fast food.

The cheapest and most expensive

The cheapest brands are service businesses run from a small office or a vehicle. The most expensive need a large freestanding building, and their high estimate pays for it.

What you pay after you open

The cost to open is paid once; the royalty is paid for as long as you own the business. The typical royalty here is 6% of gross sales, collected weekly or monthly, plus about 2.5% for a brand marketing fund. Because it is charged on sales rather than profit, you pay it in slow months too. A few brands work differently: Chick-fil-A asks for a $10K fee but takes 15% of each restaurant’s sales plus half of its profit.

How owners pay for it

Few buyers pay cash for the whole amount. Lenders commonly expect 10 to 30% from your own money, with the rest borrowed, often through a bank loan backed by the Small Business Administration. On a $356K opening cost, that is $36K to $107K in cash. Many franchisors also set their own minimum for liquid cash and net worth before they approve a new owner.

The cost calculator turns any brand’s estimate into the cash you put in and a monthly loan payment.