1851

So you&rsquo;ve found the franchise concept that seems like the perfect fit for your skills, interests and lifestyle. But what is the &ldquo;down payment&rdquo; (or initial cost) going to be? And equally important, what do ongoing fees look like to remain supported by the franchise system?

Enter items five through seven of the Franchise Disclosure Document (FDD). These items cover initial fees, other fees and the overall estimated initial investment.

The initial fee details the cost for ownership rights. In some instances, incentives or discounts are offered to benefit certain groups, e.g., existing employees that buy the franchise, multi-unit operators that agree to open multiple locations, or a specific demographic, like armed forces veterans. There may also be additional &ldquo;territory fees&rdquo; for business models in which franchisees can service more than one city under one territory.

Young Kim, a former consumer product merchandiser from the Northeast, recently went through the franchise selection process and noted that keeping the big picture in mind is a useful tactic for prospects to select a franchise that will be profitable long after the initial investment is made.

&ldquo;I didn&rsquo;t look at the investment simply as an initial fee,&rdquo; Young said, when he recently invested in <a href="http://franchise.thecleaningauthority.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=initial-and-ongoing-costs-fdd-items-5-7-2703065" target="_blank" rel="nofollow" target="_blank">The Cleaning Authority</a> of Newtown, Pennsylvania. &ldquo;I didn&rsquo;t look at the decision as an individual franchise fee or territory fee. That was just one ingredient of a larger investment, so I tried to look at the whole picture.&rdquo;

Beyond the initial fee, item six details other fees where prospective franchisees can investigate elements like royalty fees, national ad and marketing fund fees, call center resources, trainings and audits. Essentially, this section lays out the cost of the &ldquo;extras&rdquo; that a franchise brand can provide, which independent business owners don&rsquo;t get rolled into a neatly presented package if they start a business.

&ldquo;I often advise franchise prospects to understand and evaluate the value of these fees in comparison to the cost it would involve to set up these resources independently,&rdquo; said Iric Wexler, chief development officer for The Cleaning Authority. &ldquo;About 60 percent of our franchise prospects are savvy MBA level business people and understand the value of the fees for the model we have established.&rdquo;

Item seven provides a summary section for the franchisor to lay out a detailed explanation of all costs involved in initial investment. The section is routinely presented as a chart that includes cost ranges for the various elements that involve cost. Franchisees have the option to invest the minimum value in the range to keep initial costs down, although franchisees like Kim advised investing high upfront in order to increase the return on invest in the long term.

Darryl Nevins, a franchisee of <a href="http://mosquitojoefranchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=initial-and-ongoing-costs-fdd-items-5-7-2703065" target="_blank" rel="nofollow" target="_blank">Mosquito Joe</a> in Kingwood and The Woodlands, Texas bought into the brand specifically because it was a franchise option with a low initial investment. With a typical total initial investment of $94,500, the brand is known as a great option for entrepreneurs looking to pursue small business ownership without breaking the bank.

&ldquo;Beyond trusting the FDD, I would advise any franchise prospect to &lsquo;trust their gut&rsquo; as well as spend as much time as possible doing validation calls with other franchisees involved with the brand to really understand what goes into business ownership,&rdquo; Nevins said.

Wexler echoed a similar sentiment when it comes to advice for prospects in the selection process.

&ldquo;There are very few things in an FDD that are going to determine whether or not you&rsquo;re going to be successful if the brand doesn&rsquo;t match your strengths and interests,&rdquo; Wexler said. &ldquo;Franchising is a brilliant business model as long as you bring the right operator into the right model.&rdquo;

Budgeting, Business Expenses, Franchise, 1851 Franchise

Initial and Ongoing Costs: FDD Items 5-7

1851 Franchise

1851 breaks down the items of an FDD that show franchisees what their first bill from a brand will look like when they invest.

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

initial-and-ongoing-costs-fdd-items-5-7

TruBlue Home Service Ally

Why TruBlue is the Ideal Franchise for Multi-Unit Owners: Scalable Growth With a Purpose

why-trublue-is-the-ideal-franchise-for-multi-unit-owners-scalable-growth-with-a-purpose

Onigilly Japanese Kitchen

Koji Kanematsu Turned a 2,000-Year-Old Japanese Staple Into One of the Most Scalable Restaurant Franchise Models

koji-kanematsu-turned-a-2000-year-old-japanese-staple-into-one-of-the-most-scalable-restaurant-franchise-models

Lindora

Celebrating the Nurse Behind the Mission: How Melinda Endricks Is Powering Lindora’s Growth and Impact Nationwide

celebrating-the-nurse-behind-the-mission-how-melinda-endricks-is-powering-lindoras-growth-and-impact-nationwide

Sola Salons

Sola Salons Targets Chicago for Strategic Franchise Growth

sola-salons-targets-chicago-for-strategic-franchise-growth

Melting Pot

Photo of Melting Pot white chocolate fondue

How Melting Pot Franchisees Drive Year-Round Success Through Strategic Promotions and Local Marketing

melting-pot-franchise-year-round-success

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands - 1851 Franchise

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands

doordash-acquistions-deliveroo-sevenrooms

Crumbl Franchise Investment - TSG Consumer Partners -  1851 Franchise

TSG Consumer Partners Takes Minority Stake in Crumbl, Signaling Franchise Growth Potential

crumbl-franchise-investment-tsg-consumer

Yum Brands Reports Strong Q1 Results with Big Boost from Taco Bell

yum-brands-reports-strong-q1-results-with-big-boost-from-taco-bell

QSR: McDonald’s Gains Momentum With Chicken Innovation, Value Deals and Franchisee Support

mcdonalds-franchise-recovery-chicken-strategy-value-deals-2025

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

Layoffs Surge to Pandemic-Era Highs, Opening Doors for Franchise Growth

layoffs-surge-to-pandemic-era-highs-opening-doors-for-franchise-growth

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchisee spotlight graphic with photo of Amy Lepke and family and Papa Murphy's logo

After 14 Years as a Stay-At-Home Mom, Amy Lepke Returned to Papa Murphy’s — This Time as an Owner

papa-murphys-franchise-amy-lepke

Franchisee Spotlight with Micki Waters and Papa Murphy's Logo

Work Mom: How Micki Waters Became a Mother Figure to Her Entire Papa Murphy’s Team

work-mom-how-micki-waters-became-a-mother-figure-to-her-entire-papa-murphys-team

District Taco Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-district-tacos-franchise-costs-fees-profit-and-data

Franchisee spotlight image with photo of Robert Trujillo and UWRG logo on blue background

How Robert Trujillo Expanded His Construction Business With UWRG

how-robert-trujillo-expanded-his-construction-business-with-uwrg

Initial and Ongoing Costs: FDD Items 5-7

MORE STORIES LIKE THIS