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How Much Does It Cost to Buy a Franchise?

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Short answer: it varies.


There are some franchises like CruiseOne that can cost as little as a few thousand to start, while others like Wyndham can cost well into the tens of millions. The charts below, which were compiled from the 2015 FDD of each franchise, illustrate this fact.


For a CruiseOne Franchise:

Name of Fee



Initial Franchise Fee



Training Expenses



Additional Signatories/Associates Training and Travel



Office Equipment and Furniture



Initial Office Supplies



Computer Hardware/Software Equipment



Insurance, Legal and Accounting



Permits, Franchises, Bonds & Memberships



Initial Promotion and Advertising



Criminal and Civil Background Check



Additional Funds (3 months initial phase for full-time franchisees)



Financing Application Fee






For a 301-room Wyndham New Construction Hotel:

Name of Fee



Application Fee, Initial Franchise Fee



Integration Fee



Market Study



Phase I Environmental Survey



Architecture, Design and Engineering



Land Acquisition

Highly variable; not estimated




Permits, Licenses, Deposits and Related Fees



Hotel Construction



Furniture, Fixtures and Equipment






Opening Inventory and Supplies



Liquor License



Technical Systems



Training Expense



Pre-Opening Marketing/ Grand




Pre-Opening Wages



Pre-Opening Working Capital &




Other Expenses



Construction Contingency



Additional Funds for First 3 Months of Operation



ESTIMATED TOTAL (excluding land acquisition)




These are two examples from the extremes of the spectrum, but the point remains: the cost to open a franchise varies by the franchise system and location the franchise unit will be run from. But if you’re looking for a more concrete figure, according to franchising industry expert Michael H. Seid, founder and managing director of Michael H. Seid & Associates, the initial investment for a single unit franchise typically falls in the $100,000 to $300,000 range.


Why does it vary so much? Execution requirements.


Continuing with the example of CruiseOne, where the estimated initial investment can be under $10,000. Since the administrative responsibilities of the franchise can be done from home (or from anywhere as the franchise itself says), there is no need for a commercial lease or real estate purchase. The purchase and renovation of real property is commonly the most expensive and variable cost in opening a franchise. In addition, with franchises like CruiseOne where the equipment and materials needed for operation is less specialized, the cost is further lessened.


Regardless of the franchise, though, there are some common costs involved with the purchase of a franchise. The first of those costs is the franchise fee.


The franchise fee is basically a cover charge for entry into a franchise system. Think of it as the fee you pay the franchisor for doing the legwork developing the brand, and saving you from many (not all) of the pitfalls that come with starting a business from the ground up. It usually covers the right to use the franchisor’s system (including trademarks and proprietary operating system), and services the franchisor provides to franchisees such as help finding a location, training materials, etc. For most franchises, the franchise fee is due in full when the franchise agreement is signed.


Business Handshake


Also associated with opening a franchise is the cost for training. While the training materials are often covered by the franchise fee, franchisees will often have to cover their attendance costs (travel and lodging) for the on-site training.


Other common opening fees for franchises are similar to a non-franchise business opening. These costs include:


  • General office supplies and equipment
  • Industry-specific equipment
  • Leasehold improvements and construction, if real estate is needed
  • Signage and decor, if not a home-based franchise
  • Inventory
  • Professional fees (e.g. legal, licensing, accounting, etc.)
  • Grand opening advertising/marketing
  • Insurance
  • Taxes


Many franchisors will also specify a minimum liquid cash requirement for those who want to open one of their franchises. The requirement is an amount of money they believe a franchisee should have in savings and able to access quickly, if needed.


Most often, the liquid cash requirement includes an estimate for emergencies and setbacks. It also typically accounts for regular living expenses until the franchise unit begins turning a profit large enough for the franchisee to garner an adequate take-home wage.


Note: While these costs are common, they may not apply to all franchises. Please check the Franchise Disclosure Document (FDD) of a specific brand for details on its investment costs and don’t be afraid to ask the franchisor any questions you might have. Also, be sure to go over any franchise agreements with a franchise lawyer and accountant before signing.

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