What Is Important to Know When Acquiring a Franchise?

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It is an exciting prospect to be purchasing a franchise. Nonetheless, it can quickly transform into a nightmare if you are not careful. Failure to properly consider all the costs of acquiring a franchise can lead to financial ruin. If you would like more information about how much it can cost to acquire a franchise, keep reading and give our skilled franchise acquisition attorneys a call today. We look forward to hearing from you.

What are the significant costs when franchising?

It is important to recognize that you will encounter several costs when building your franchise. The three largest ones include the following:

  • Startup costs: In order to get your new business up and running, you will likely incur these expenses. Initial investment costs depend largely on the type of franchise. In some cases, you can launch low-cost franchise businesses for under $20,000, and others may cost several million dollars to open. Typically, service businesses will cost far less compared to retail or food businesses due to real estate and buildout costs. According to Franchise Business Review data, the average franchise business will cost $150,000.
  • The franchise fee: This refers to the upfront fee that is charged by franchise companies to give you a license to operate their business for a specified period of time. Essentially, this is “the cost of admission” to use the franchisor’s brand and business systems. This will cost between $25,000 and $50,000.
  • Recurring fees: Also, the franchise fee and your initial startup costs, all franchise companies charge continuous fees in exchange for a host of benefits you will receive as a franchisee. These generally include royalty, advertising and marketing, technology, and more.

If you have questions or concerns about these fees, it is in your best interest to give our experienced franchise lawyers a call.

How much does it cost to acquire a franchise?

In most cases, franchise fees cost between $25,000 and $50,000. However, keep in mind that it can vary depending on the type of franchise you are trying to acquire, according to the Small Business Administration. Just like with any new business, you will face one-time startup costs and ongoing recurring costs that you will need to cover as you launch and grow your business. It is important that you have a good understanding of the main categories of costs.

How can FortmanSpann help you with the franchise acquisition process?

At FortmanSpann, you can obtain legal aid from one of the few firms in the United States that concentrates exclusively on franchise law. Our legal team has had success representing the rights of franchisees all across the country. Over the years, our firm has represented clients in various State Courts, Federal Courts, arbitrations, and mediations. A legal representative will fight with everything in their power to get you a reasonable deal you can afford. Give our firm a call today for the representation you need and deserve.

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