How Much Does it Cost to Buy a Franchise?
There’s much to consider when it comes to starting a business, not the least of which is cost. For budding entrepreneurs who don’t want to start from the ground up, a franchise may seem like the perfect answer. These turnkey opportunities come with a proven business model, brand recognition, trademarks and operating procedures already developed and in place. Some franchises will even help with sourcing locations, employee training and more. Franchising is a great way to start a business, but it’s important to do your due diligence—especially when it comes to costs.
Initial Startup Costs
Initial investment costs for a franchise can range anywhere from $10,000 at the very low end to millions for a highly recognized brand. The average franchise investment costs about $50,000 to $250,000—but that’s just the start.
Startup costs generally include the initial franchise fee; however, depending on the type of franchise purchased, other costs might include royalties and ongoing franchise fees, marketing fees, required purchases of products or services, training, equipment and supplies, technology, legal services, accounting, insurance, building leases, permits and licenses, background checks, financing fees, signage and much more.
Royalties and Ongoing Fees
Royalties and ongoing fees may be determined by how much money your franchise makes each month, or a set flat fee. Royalties typically range from 4% to 12%, depending on the type of franchise. But by the time “everything is said and done,” the average franchise take up to a third of the pre-tax profit margin of its franchisees. In contrast, the business concept provided by Healthy YOU Vending simply requires a one-time, startup investment.
Franchise Approval Process
It all begins with the application process. Franchises will thoroughly review your finances to make sure you have enough net worth to keep the doors of your business open. Most franchises mandate a minimum liquid cash requirement. Although you may get a bank loan, franchises often require 25–30% liquid capital, such as cash or home equity. This can result in some otherwise qualified entrepreneurs being turned away due to the lack of enough net worth in the eyes of the franchiser.
We’re all familiar with some of the top franchises in the world: McDonald’s, 7-Eleven, Chick-Fil-A, Starbucks, Smoothie Kings and Little Caesars, just to name a few. Most of these franchises are cost-prohibitive to the average up-and-coming entrepreneur. The total investment for a Burger King franchise, for example, can cost as much as $2 million, including the initial $50,000 franchise fee, plus ongoing royalty fees of 4.5%. McDonald’s requires a minimum of $500,000 unencumbered, liquid assets. But don’t lose heart—affordable franchises do exist. But, then again, there are other options altogether.
Alternates to a Franchise
Exorbitant franchise fees and liquid assets don’t have to stand in the way of your dreams to become a business owner. As the search for a potentially successful business opportunity leads many to seek out franchises, Healthy YOU Vending has become the top choice of many future entrepreneurs. In fact, Healthy YOU Vending was named the fastest growing business opportunity in 2020.
Healthy YOU Vending Business Model vs. a Traditional Franchise
Franchises are a great business model, but Healthy YOU Vending offers unprecedented benefits, including a one-time investment and no ongoing or royalties or fees. Plus, our business model offers franchise-level support without strings attached, giving you the opportunity to be a true entrepreneur without some of the trappings inherent to running a franchise—including low overhead, no employees, no long-term building leases, and your own business name and brand. Best of all, a Healthy YOU Vending business can be fully operational months before the average franchise has a paying customer. Our business model is just about as simple as it comes. And don’t forget that a trend towards healthy eating is here to stay.