The franchise fee is the number everyone quotes and the smallest number that matters. Across the industry it’s about 11% of what you’ll actually spend. Here’s the other 89%.
Franchise costs arrive in four waves, and people almost always plan for the first and get surprised by the fourth.
The initial franchise fee is a one-time payment for the right to operate under the brand, use its systems, and receive initial training and launch support. Across systems, the median sits around $42,500, with most falling between $25,000 and $50,000.
That fee generally reflects a single franchise territory or unit. If you’re purchasing the rights to develop multiple territories or locations, your total upfront franchise fees will increase. Some brands structure multi-unit or multi-territory agreements differently, so make sure you understand exactly what the quoted franchise fee includes.
Some franchisors also offer discounts on the initial franchise fee to qualifying candidates. These may include veterans, first responders, women, minorities, younger entrepreneurs, or other groups, depending on the brand. Veteran discounts are often around 10%, though some brands may offer significantly larger reductions.
Ask your BizExplorer consultant what franchise-fee discounts or incentives may be available for the brands you’re considering.
Beyond the franchise fee, you’ll need to account for the costs required to get the business ready to operate. Depending on the concept, that may include site selection and lease deposits, build-out and leasehold improvements, equipment, signage, initial inventory, vehicles, technology, licenses, insurance, and pre-opening marketing.
This is where costs can vary significantly between franchise categories and business models. A home-services concept, for example, may have very different startup requirements than a brick-and-mortar restaurant.
These estimated expenses are outlined in Item 7 of the FDD as a low-to-high initial investment range. Use that range to understand what goes into opening the specific franchise you’re considering—not just the franchise fee itself.
Want to understand what else is inside the FDD? Go deeper with Understanding the Franchise Disclosure Document.
Working capital is the cash available to help operate the business as it gets established. It can help cover expenses such as payroll, rent, marketing, and other operating costs before the business generates enough cash flow to support them consistently.
One word of caution: the working-capital estimate disclosed in the FDD may not reflect exactly how much you will need. Your market, business model, operating expenses, personal financial situation, and the time it takes the business to ramp up can all affect that number.
Rather than planning around the minimum estimate alone, think about how much financial runway would allow you to launch and grow the business comfortably. If you plan to use an SBA-backed loan or another funding strategy, exploring those options early can also help you account for working-capital needs as part of your overall funding plan.
Your BizExplorer consultant can connect you with funding resources and help you identify questions to ask as you evaluate the total investment.
Exploring how you might fund your investment? Continue to Financing a Franchise.
Your investment doesn’t end when the doors open. Franchise systems typically include ongoing fees such as royalties, brand or advertising fund contributions, technology fees, and required local marketing spend. The specific amounts and structure vary by brand and are disclosed in the FDD.
It’s important to understand not only what you pay, but what those fees help support. Depending on the franchise system, that may include brand development, training, operational support, marketing, technology, vendor relationships, research and development, and continued improvements to the system.
When comparing opportunities, look at the whole picture: what the ongoing fees are, how they’re calculated, what support and resources you receive in return, and how those costs fit into the economics of the business.
Indicative ranges drawn from a large sample of current FDDs. Use them to orient yourself, then read the specific brand’s Item 7 – individual brands vary widely inside these bands.
| INDUSTRY | Typical total investment |
|---|---|
| Home services | $128,000 – $226,000 |
| Senior care | $120,000 – $248,000 |
| Cleaning & maintenance | $134,000 – $287,000 |
| Retail | $185,000 – $431,000 |
| Fitness & wellness | $311,000 – $717,000 |
| Health & beauty | $323,000 – $622,000 |
| Food & beverage | $370,000 – $856,000 |
The pattern is consistent: the less physical space a concept needs, the less it costs to enter. Home services, senior care, and mobile concepts cluster at the bottom because there’s no dining room to build. Food sits at the top for exactly the opposite reason.
That’s also why total cost and total effort don’t track together. A $150,000 home-services franchise can be a demanding full-time job with a crew and a fleet; a $600,000 fitness location can run on a general manager. Cost tells you about capital. It tells you very little about your calendar.
Nearly every brand publishes two qualification numbers, and they’re widely misread.
Liquid capital is cash and near-cash you could deploy within about 30 days – checking, savings, taxable brokerage accounts, and often retirement funds you’re willing to roll over. It is not home equity, and it’s not your annual income.
Net worth is total assets minus total liabilities, home equity included.
What franchisors are really testing is whether you can fund the equity injection, cover the gap between opening and profitability, and keep your household solvent while all of that happens. A buyer who exactly meets the liquid capital requirement and has nothing behind it is a weaker candidate than one with less on paper and real reserves – and lenders read it the same way.
Practical rule: whatever the brand’s stated liquid capital requirement is, aim to have it plus six months of personal living expenses untouched. If you don’t, you’re not disqualified – but you’re choosing a narrower margin for error than the numbers suggest.
The cost profiles can look very different, which makes it worth comparing both paths as you explore your options.
A new franchise location generally means paying the initial franchise fee along with the costs required to launch the business. Depending on the concept, that could include build-out, equipment, inventory, hiring, marketing, and working capital while the business gets established. You’re starting fresh and building the operation in an available territory.
An existing franchise location, or resale, means purchasing a business that is already operating. The asking price may reflect factors such as its financial performance, assets, location, lease, customer base, and market conditions.
But existing doesn’t automatically mean profitable or cash-flow positive. Some resales are performing well, while others may be struggling or require changes from a new owner. That makes it especially important to understand the business’s financial and operating history, what you’re actually acquiring, and why the current owner is selling.
The two paths come with different costs, timelines, and considerations. Comparing both can help you decide whether you’d rather build a new location from the ground up or evaluate an existing business already in operation.
On the BizExplorer map, you can explore new franchise opportunities and existing businesses in the same market, making it easier to see the different paths to ownership available where you want to own.
Before you talk to anyone, fill in five numbers:
Line 5 is the one that actually sets your ceiling. Everything else is inputs; that one is the constraint.
Filter the BizExplorer map by investment range, category, location, and other criteria to discover opportunities that fit what you’re looking for.
Explore on your own and see what’s available, or connect with a BizExplorer consultant when you want help comparing the opportunities you find.
Figures are industry-wide indicators from public sources and current FDD samples. Every brand is different; the numbers that bind you are in that brand’s Item 6 and Item 7. Not legal, tax, or financial advice.
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