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

Be a Community Hero: How TruBlue Franchisees Are Changing Lives Beyond Business

be-a-community-hero-how-trublue-franchisees-are-changing-lives-beyond-business

Caring Transitions

Caring Transitions Wraps Up Record-Breaking Q3 With National TV Launches, Platform Growth and Key Leadership Promotion

caring-transitions-wraps-up-record-breaking-q3-with-national-tv-launches-platform-growth-and-key-leadership-promotion

SweatHouz

SweatHouz SWTHZ Franchise - Hunter and Mallory Mitchem - Franchisee Feature - 1851 Franchise

From Aerospace to Wellness: Hunter Mitchem’s Journey to a SweatHouz Empire

sweathouz-franchise-hunter-mitchem-6g

Onigilly Japanese Kitchen

Onigilly - Low Operating Costs Drive High Returns for Franchisees - 1851 Franchise

Maximize Your ROI: How Onigilly’s Low Operating Costs Drive High Returns for Franchisees

onigilly-franchise-fast-casual-franchise-opportunity

Layne's Chicken Fingers

What Is the Layne’s Franchise Disclosure Document, and What Will I Find in It?

laynes-franchise-disclosure-document

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 Development Website Builder

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

Bed Bath & Beyond - Franchise Expansion - Retail Strategy - 1851 Franchise

Bed Bath & Beyond Launches Franchise Model as Part of Comeback Strategy

bed-bath-beyond-franchise-expansion-retail-strategy

Senior Entrepreneurship - Franchising - 1851 Franchise

Senior Entrepreneurship Is Rising — And Franchising Is a Key Outlet

senior-entrepreneurship-franchising-silver-startups

U.S. Government Shutdown - Impact on Franchises - 1851 Franchise

Government Shutdown Stalls SBA Loans: How the Shutdown Could Impact Franchises

government-shutdown-impacts-sba-loans-tourism-franchises

Subway Franchisees Resist Expensive Remodel Directives

subway-franchisees-resist-expensive-remodel-directives

The American Franchise Act: What It Means for Franchisors and Franchisees - 1851 Franchise

The American Franchise Act: What It Means for Franchisors and Franchisees

american-franchise-act-joint-employer-standard

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

NJCAR v. Ford - New Jersey Supreme Court Limits Standing Under Franchise Practices Act

New Jersey Supreme Court Limits Standing Under Franchise Practices Act

new-jersey-franchise-practices-act-njcar-v-ford

Friendly’s Parent Company Acquired by Multi-Unit Franchisee as More Owners Take the Lead in Brand Acquisitions 

friendlys-parent-company-acquired-by-multi-unit-franchisee-as-more-owners-take-the-lead-in-brand-acquisitions

Top Education Franchises To Consider for 2025 - 1851 Franchise

Top Education Franchises To Consider Investing In for 2025

top-education-franchises-investment-opportunities

Top Early Childhood Education and Child Care Franchises for 2025 - 1851 Franchise

Top Early Childhood Education and Child Care Franchises for 2025

early-childhood-education-child-care-franchises

1851 Franchisee Spotlight graphic with photo of Barb Volk and KidStrong logo

Why This Orangetheory Fitness Franchise Owner Is Developing KidStrong Franchises

kidstrong-franchise-owner-barb-volk-2025

Top Arts and Creative Learning Franchises for 2025 - 1851 Franchise

Top Arts and Creative Learning Franchises for 2025

top-arts-creative-learning-franchises

Initial and Ongoing Costs: FDD Items 5-7

MORE STORIES LIKE THIS