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What’s a franchise fee?

On Behalf of | Nov 14, 2022 | Franchise Law |

If you want to buy into a franchise, the first thing you have to do is get out your checkbook and make a payment to the franchisor for the franchise fee.

How much do you have to pay? It depends largely on the particular franchise you want to operate. Opening a Subway may only cost you $15,000, but opening a Panera will probably cost closer to $35,000. That’s before you get into any of the additional costs for equipment, the building and more.

If you’re lucky, you can split the cost of your franchise fee into several payments, but you won’t be able to open your doors until the entire fee is paid.

What does the money for the franchise fee get you?

It’s really the key to your whole franchise operation. When you open a franchise, you aim to capitalize on an existing brand in order to get your business up and running almost immediately. The name-brand recognition you get from operating a Subway, for example, will have a vastly different effect than opening something like “Joe’s Little Sandwich Shop” and trying to build your business from there.

Your franchise fee gets you:

  • The right to use the company’s branding, logos and trademarks
  • Access to the franchisee network and support
  • Marketing and advertisement templates
  • Access to the business operations manual and systems
  • Formal training and any specific technology you may need

When every dollar counts, you naturally want to make the most out of your money. With all of the costs that come with opening a franchise, it’s only wise to make sure that you have experienced legal guidance throughout your negotiations. Having someone review your contracts can help you avoid unnecessary (and unpleasant) surprises.