The Real Cost Of Franchising Your Business

AllBusiness (blog):

It’s often said that the biggest mistake new franchisors make is undercapitalizing their new businesses. This happens because companies new to franchising do not realize that the most expensive part of the life of a franchisee relationship is in the early months when a franchisee needs training and intense levels of assistance. It is a mistake to project expenses evenly over the life of the relationship; experience teaches that new franchisee expenses are heavily weighted to the front end.

It is also a mistake to assume that the initial fees paid by a franchisee will cover all of the franchisor’s expenses in this early phase. In addition, other initial expenses of a new franchising program must also be anticipated; they will be incurred long before franchise fees begin flowing. Here is an overview of the costs you’ll need to budget for when franchising your business.

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