What does the initial franchise fee cover?

Answer 1

A franchise fee is an initial amount that pays to the company to make use of the brand name, and its resources.

The company’s franchise disclosure document (FDD), has clear mention of the franchise fee details.

Signing an agreement and paying the fees allows you to use the franchisor’s business system and/or products.

Factors Used To Determining the Franchise Fees

There are many factors are used to determine the fee, it includes:

 Uniqueness

 Complexity of the system

 Profitability of the business

 Expected return of investment (ROI)

 Cost of development of company

 Company ‘s acquisition and granting franchises

Why It Is Important To Pay A Franchise Fee?

Every company and franchisor deserves to charge a franchise fee and it is the duty of Franchising to pay that, it is not for the company’s profit, it’s for your profit.

• Paid for the brand value – Franchise businesses eliminate incurring expenses because they are already established brands. Company presence both online and offline. More importantly, the brand is already known to the people and the internet.

• Putting money on the table – It makes franchising value and more accountability yourself.

• Ongoing training & Support – Company gives comprehensive training and support that advances you on right track.

Answer 2

The initial fee varies from company to company and is paid by the franchisee when the franchise is granted. The initial franchise fee covers the cost of training, recruiting, territory analysis, site identification, specialist equipment, stationary, franchisee launch, etc.