Expert Guide on Why Pay a Franchise Fee?

by FMS Franchise | Articles
4 minutes
Fees

So you’ve decided to look into businesses and are considering buying a franchise instead of starting your own business without the guidance and direction of a franchisor. The first question you most likely have is why pay a franchise fee and add additional expense to your start-up investment in the new business?

Maybe you’re asking yourself what the franchise fee is for and why it is necessary for you to pay it. There are many benefits to the franchise fee and what it offers you and in most business decisions, the old saying “it takes money to make money” certainly holds true with the franchise fee as well.

Take a look below at the many benefits you receive when you pay the franchise fee for your new location I think that if you are considering the right franchise with the appropriate value proposition, a franchise fee is a valid expense for a new business start-up.

Resources available at Your Fingertips

When you pay the franchise fee it is for a wealth of resources right at your fingertips. Part of the beauty behind a franchise opportunity is that it is already proven to work and should have validation behind the business model. It has a business model in place that is proven to be successful and now they are sharing this with you, in effect you should be getting a blueprint for success with a good franchise model.

The resources you gain for your franchise fee include items such as initial training, support, guidance, and ongoing coaching needed to be successful in your new business venture. If you compare the expenses of hiring a qualified business consultant to support your growth, generally they are in line with the cost of a franchise fee. 

In addition, you gain rights to the trademarks, patents, and intellectual property the franchisor has that you want in your new business. Franchise fees can also provide some tangible items such as software, technology, marketing materials, and other aspects.   

Training and Support

Although you will now own your own business, you do need training and business support for the franchise location in order to receive the benefits of franchise ownership versus general business ownership. This is another benefit you receive from your fee paid is the time, effort, and resources spent on your behalf to train and provide you with the expertise needed to shorten the learning curve in your new business.

You will receive training for everything from the back office operations to the frontline customer service policies and procedures. You’ll learn everything there is to know about running this franchise and also your employees will be thoroughly trained as well.

Good franchises will have a solid ability to transfer ownership of expertise and will effectively “train the trainer”. You also receive ongoing support after the opening of your franchise to help you see continued success in the location.

Dedicated Support

The franchise fee also allows you as the business owner access to resources that are set up and dedicated to your continued success in the ownership of your new location. Having support when you’re starting out in a business is very important to your success. Paying the franchise fee gives you that critical support you need to make sure everything goes off without a hitch.

Your franchise fee goes for so much more than just buying your way into the company. Do not think of it as that. It is the key to having the support you need on an ongoing basis. This support makes it possible for you to see success in all you do with the company. You’re embarking on a brand new journey and it is a great road ahead with the support you receive from the brand you’ve chosen.

 If you’re thinking of going into the franchise business, remember that you have a world of opportunities out there. Be sure that you check into the franchise fee and how much it will be, but don’t gauge the value of the franchise fee until you understand what comes with the franchise and whether the services offered warrant the fee requested.

Many times you can incorporate the franchise fee into business loans such as SBA loans. We recommend speaking with other franchisees of the system you are considering and asking them to point blank whether they feel the franchise fee was worth the expense.

 If you are considering franchises and looking into different franchise models and would like to better understand why you should pay a franchise fee or what franchise fee makes the most sense, feel free to contact us for support and franchise consulting.

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