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The Cost of a Franchise Offering

Written by: John Power

Article Overview: There are initial and ongoing costs to a franchise program. This article summarizes each and gives an idea of what the franchisor can expect.

The Cost of a Franchise Offering

Once you initiate a franchising program, there are development costs and there are certain recurring costs, after the initial development costs are paid. Funds to pay for these costs must be allocated from initial franchise fees and from ongoing franchise royalties. This is important when determining how to set your franchise fees. Development Costs

• Fees paid to establish the legal, operational, and marketing portions of the development program
• Amounts paid to your accountant to prepare financial statements
• The cost of printing marketing materials
• A budget to advertise franchises for sale
• Possible legal fees for franchise agreement negotiation as you sell franchises
• Paying broker, or franchise development, fees to sell franchises
• Paying preparation costs for documents submitted to states requiring registration or filing
• Paying filing fees paid to individual registration and filing states

Recurring Franchising Costs

• The cost of preparing audited financial statements each successive year
• The annual cost of updating and rewriting the legal documents
• A legal review and approval of the updated documents
• Preparation of the annual renewals to registration and filing states
• Annual filing and registration renewal fees to individual states
• The cost of printing marketing materials
• Ongoing budget to advertise franchises for sale
• Possible legal fees for franchise agreement negotiation as you sell franchises
• Paying broker, or franchise development, fees to sell franchises

The most significant recurring costs will be the preparation of audited financial statements, the annual cost of updating your documents, the annual cost of reapplying to registration states, and your ongoing advertising budget.

Individual state registration initial, renewal, and filing fees vary from $250 to $750 per year.

More information can be found at: www.biltmorefranchise.com

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Article Tags: accountant, audited financial statements, budget, franchise agreement, franchise development, franchise fees, franchises for sale, initial development, initial franchise, legal documents, li li, marketing materials, negotiation, registration renewal fees, royalties, ul



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