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

Benjamin Franklin Plumbing

image of a benjamin franklin plumber employee franchise

Top 5 Reasons To Invest in Benjamin Franklin Plumbing Right Now

benjamin-franklin-plumbing-franchise-5-reasons-to-buy

Mister Sparky Electric

image of mister sparky cars franchise authority brands

Wired for Success: 5 Powerful Reasons To Invest in a Mister Sparky Franchise Now

mister-sparky-franchise-5-reasons-to-invest

image of Mister sparky electric employee working with customer

On-Time, Every Time: How Mister Sparky Delivers the Electrical Service Homeowners Can Count On

mister-sparky-electric-service-franchise

image of mister sparky electric on time elctricians from franchise mister sparky

The Electrician You Can Count On: How Mister Sparky Delivers Power, Punctuality and Profitability

mister-sparky-franchise-power-punctuality-profitiability

image of a benjamin franklin plumber employee helping a customer

The Punctual Plumber That Wins: How Benjamin Franklin Plumbing Redefines Home-Service Reliability

benjamin-franklin-plumbing-home-service-reliability

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

Planet Fitness Franchisees Donate $100K to Support Texas Flood Relief - 1851 Franchise

Planet Fitness Franchisees Donate $100K To Support Texas Flood Relief

planet-fitness-texas-flood-relief

McDonald’s Is the Latest Franchise To Bet Big on Beverages with 500-Store Premium Drink Test

mcdonalds-is-the-latest-franchise-to-bet-big-on-beverages-with-500-store-premium-drink-test

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

Subway - John Fitzpatrick Named CEO - Breaking News - 1851 Franchise

Subway Names Jonathan Fitzpatrick as New CEO, Effective July 28

jonathan-fitzpatrick-subway-ceo-leadership-change

AI Is Reshaping Franchising: $100 Billion Valuations and Hyper-Localized Advertising

ai-is-reshaping-franchising-100-billion-valuations-and-hyper-localized-advertising

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Rising Jobless Claims Could Signal Challenges — and Opportunities — for Franchising

rising-jobless-claims-affect-franchising

"Come in, We're OPEN" sign against abstract background

Small Business Optimism Dips, Raising Concerns for Franchise Owners

small-business-optimism-dips-raising-concerns-for-franchise-owners

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

Navy Veteran and Professional Artist Couple Open Caring Transitions in Texas

Navy Veteran and Professional Artist Couple Set Out to Build a Purpose-Driven Business With Caring Transitions in Texas

navy-veteran-and-professional-artist-couple-set-out-to-build-a-purpose-driven-business-with-caring-transitions-in-texas

Why This Real Estate Broker Decided To Bring Caring Transitions to Central Texas

Initial and Ongoing Costs: FDD Items 5-7

MORE STORIES LIKE THIS