Entrepreneurs choose franchises on sale for various reasons. While one reason can be an established business model, another can be low-cost of starting a business. Of course, if you are starting a small business from the ground up, it will cost you more than a same-sized franchise business any day. But how much do you have to invest in a franchise business?
Costs Involved in Buying Franchise
- Franchise fee
One of the main parts of your expenses will include the franchise fee. But this fee is also something based on which you will have to research what business you want to buy. The search must be based on the low-cost range from the beginning if you want to buy an affordable low-cost franchise.
Many low-cost franchises can be bought within $35,000, and some others won’t even cost you $2000. So, it depends upon you how much you want to invest in a business if the cost is the most important factor.
For the franchise fee, you will receive training, franchise support, access to the franchisor’s intellectual property, and much more.
- Build-out expenses
This is one of the factors that will vary depending upon your franchisor or the location. Once you have chosen the franchise and the suitable location, your franchisor will help you set up the business and figure out the build-out costs.
Some of these costs include fixtures, signage, equipment, etc. Some other costs to consider are deposits, insurance, contractor fees, security fees, zoning compliance, etc.
This also includes renting a physical location, but in the case of home-based businesses, these costs are significantly cut down.
- Operating capital
Before you start a franchise business, it is important that you consider the operating capital. Your business operations will be smooth if you can keep the operating capital for your business ready for at least 6 months. These expenses could be anything from paying rent or other bills or driving around charges in the case of service-based businesses like window glass solutions.
New businesses take time to be profitable – so if you are thinking of waiting for profits to pay for your operational cost, you might be waiting for a long time.
- Legal and accounting fee
Since the franchise is an agreement between you and your franchisor, you want to make sure about every legal aspect of the agreement. And if you are not a legal expert or have problems understanding documents, getting external legal help before buying a business will help you in the long run.
Especially when you are reading the FDD (Franchise Disclosure Document), which is a document that includes all the terms and conditions of the business, external legal help charges might vary from professionals or accountants in case of accounting-related documents.
- Royalty Fee:
Royalty fees are the fees you, as a franchisee, pay your franchisor monthly, depending on your income. The royalty fee is mostly paid in a certain percentage of the profit you make, which can be anywhere from 4% to 12%.
Although since it is percentage-based, you will not have to pay and lose business if you’re not making enough revenue.
But there are also franchises that don’t charge you any royalty fee. One of the well-known such businesses is Window Medics, which makes its franchisee unit the owner of the business, including the profits they make.
Conclusion
The best part of buying franchises on sale is that you can choose which business to buy or invest in based on how much you want to invest. It only takes some mathematical skills and research to finally get to a conclusion on how much you will have to spend for buying and operating a franchise.
One of the most popular window glass solutions, Window Medics, offers an ideal franchise opportunity for entrepreneurs. The opportunity is a highly affordable one, not to mention it doesn’t charge any royalty fee. Being a reputed company, Window Medics also makes it easier for you to acquire franchise financing from various banks or institutes.
Call 888-329-7116 or email info@windowmedics.com to learn more about Window Medics.