The franchise fee is only the start. Add up everything you would pay over the life of the agreement, from launch costs to royalties, so you can compare opportunities on their real cost.
Use the figures from the franchisor’s information pack. Leave anything that does not apply blank.
| Year | Revenue | Royalty | Marketing levy | Fixed fees | Total fees | Running total |
|---|
The running total includes your upfront costs and any renewal fee. Figures exclude VAT.
Check exactly how each fee is worked out, whether it can rise during the term, and whether minimum fees apply even if your sales are low.
Find out what happens at the end of the term, whether there is a renewal fee, and whether you will need to refit or replace equipment to renew.
A lower franchise fee can come with higher royalties. Run each opportunity through this calculator over the same term to see which costs less overall.
When people compare franchises, they often focus on the headline franchise fee. But the fee is usually only one part of what you will pay. Over a typical five-year agreement, ongoing royalties and levies can add up to far more than the upfront cost, so it pays to look at the whole picture before you commit.
As well as the franchise fee, you will usually need to pay for equipment, a vehicle or premises fit-out, launch marketing, professional advice and initial training. Working capital is not paid to the franchisor, but it is money you need to have available, so it belongs in your budget.
Most franchisors charge a royalty, usually a percentage of your turnover, in return for the brand, systems and support. Many also charge a marketing levy that funds national advertising. Some add fixed monthly charges for software or technology. Because percentage fees rise with your sales, a successful business pays more in fees, which is worth factoring into your profit forecasts.
Two franchises with similar upfront costs can have very different ongoing fees. Running both through the same term and revenue assumptions shows you the real difference, and gives you clear questions to ask each franchisor about what you get for your money.
Turn revenue, margins and fees into a projected monthly and annual net profit.
Put up to three franchises side by side on investment, finance and track record.
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