If you are hunting for a Franchise For Sale and come across Franchise Opportunities that have a very low fee for start up then be wary. When you acquire a franchise it is not just a concern of paying a one-off cost for the start up cost. There are ongoing fees that are implicated in the process of any Franchise For Sale. The most familiar cause of a franchise to fail is the lack of funds to cover these fees.
The Franchises UK fees are mostly controlled by the industry or sector that you are going into. The scope of Franchise Opportunities vary incredibly for start up fees, a major restaurant chain may want a start up charge of £200,000 whereas a small home based franchise may only charge £5000. There is a range of fees within the same industry as well, you might pay a lot more for a prime location or the franchise might have grown considerably and therefore the franchise charge has grown. The greater the charge may be down to the franchisor offering a number of services and additional support so if you pay a lower fee then this level may not be the most positive.
We will now look over a few of the fees related with a Franchise For Sale, these include one-off fees and ongoing fees.
1. The franchise fee, this is the opening payment you will make when buying the franchise, it will be set by the franchisor and will be paid on the signing of the franchise agreement. This charge allows you to use the franchises name and branding, in a lot of cases it also gains you access to the support and training of the franchisor along with their marketing and promotions.
2. Initial money investment, this will be money that you will put in additionally to the start up charge. In a certain number of Franchises UK the franchisor will expect you to have about 30% of the start up charge as back up to qualify to buy a franchise.
3. Working capital, this is the money to maintain yourself and the franchise through the initial months of start up, not all franchises start earning money immediately and you need money to survive on until it does. Getting through the initial months is vital to your business and there must be this capital or the franchise will fail.
4. Professional fees, I cannot emphasise how imperative it is to hire a franchise solicitor and accountant. These could be expensive to start off with but they will keep you within the limits of the taxman and make sure that you get the best Franchise For Sale.
5. Royalty fees, this will be an ongoing fee between you and the franchisor. This percentage, typically around the 5-10% mark, will be detailed in the franchise agreement and you and your solicitor ought to have negotiated this fee in the acquiring of the franchise.
There are other fees but it depends on the Franchise For Sale that you acquire, if you have premises then the premises fees like rent, utilities and insurance will be major fees. If you intend to employ staff then the payroll, taxes and training will be fees to you. Make sure you have the appropriate backing and cashflow to take on a franchise as fees can vary hugely, make sure you are aware of all fees before signing that franchise agreement and taking that big step of buying a franchise.