Franchise Payments Franchisees Can Expect to Pay
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Franchise Payments Franchisees Can Expect to Pay
Unsurprisingly, there are multiple payments related to owning a franchise. As dictated by the Federal Trade Commission (FTC), franchisors must list those fees in their Franchise Agreements. The following are the primary payments that will be listed:
Initial Franchise Fee: Franchisees pay this fee to obtain the right to use the franchisor's trademark, products and/or services. These franchise fees, which are essentially paying for established operating systems/brand awareness, may range from under $10K to over $100K.
Legal/Accounting Fees: Attorneys need to review your franchise agreement in order to create a legal entity for your franchise (i.e. a corporation, LLC, etc), and accountants need to review a franchisor's financial statements.
Liability, Property/Casualty, and Other Insurance: Make a copy of the franchisor's insurance requirements (listed in their UFOC) and fax them to your brokers for rate quotes should you wish to get an idea of how much insurance will cost. If you have employees, you might be required to offer disability and life insurance along with additional employee benefits such as retirement plans.
Employee Salaries: Making a profit can take up to three years; make sure you know how much you'll need for your employees' salaries during that time.
Building and Outfitting Costs: Building/outfitting store costs vary substantially depending on the kind of business you're opening. The costs will most certainly be more if you are attempting to build a store from the ground up than if you're merely outfitting an existing location. However, even in the latter scenario, you'll need ventilation, décor, furniture/seating, fixtures/equipment, lighting, signage and restrooms.
Rent and Security Deposits: You'll have to pay these fees if you lease space for your business.
Equipment and Software Upgrades: Your franchisor may require planned equipment and software upgrades, which you would have to pay for.
Royalties: Franchisees must pay regular royalty fees to the franchisor. These fees are generally monthly, and can range anywhere from 4 to 8 percent of a franchisee's total sales.
Advertising Fees: A number of franchisors require franchisees to contribute to an advertising fund, which funds local to national ad campaigns, commercials, and other promotions. Some franchisors have co-op programs in which the franchisor pays a portion of the costs, allowing franchisees to pay for the rest on a case-by-case basis.
Franchise Payments Franchisees Can Expect to Pay - To learn more about this author, visit Sebastien Page's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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