Financial Services Franchise:
Owning a Financial Services franchise can be the ideal way to have your own business without starting from scratch. But before you take the financial leap, make sure you look at whether you can really afford to purchase and maintain a franchise.
Total start-up costs for a franchise can range from $20,000 or less to over $1 million, depending on the type of business you select and other factors, according to the International Franchising Association. To determine if you can truly afford a franchise, you must understand the costs involved. Here’s a breakdown of some of the major expenses associated with buying franchise:
· Franchise Fees – This one-time, front-end fee ranges from $4,000 to $20,000 and gives you access to the franchisor’s business concept, training program and other benefits. L.A. Weightloss Centers, for example, has a $20,000 franchise fee and provides owners with four weeks of comprehensive classroom and in-center instruction. Ace Hardware, which has a $35,000 franchise fee, gives a six-week training class, 30 days of in-store support and interactive follow-up visits.
· Royalty Fees – These mandatory ongoing fees typically runs 3 to 8 percent.
· Working Capital – Like any business, a franchise needs cash to operate. You may need to make the first and last month’s payment on your rental agreement plus a security fee. You’ll also have to pay a deposit to the electric, gas and telephone companies. Plus you’ll need money for the cash drawer, funds to pay employees and petty cash for everyday incidentals.
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