Are franchises worth the fees you pay?

Hi folks,

As many of you know I’m a multi-unit Smash My Trash franchisee. 

Like any franchise, it comes with fees. I paid a franchise fee on the front end, and pay royalties and technology fees on an ongoing basis.

But the biggest expense by far is this $300K beast of a truck. 

Smash My Trash corporate designed and patented the truck, developed overseas manufacturing of the rig, and facilitated shipping of the components to Canada, all before the finished product headed south and showed up at my business with a bow on it.

Does the franchisor make a profit when they do this? Yes.

Would I want to innovate and handle all of those logistics myself, before being able to drive my first dollar of revenue? Hell no.

A franchise allows me to execute and drive revenue on day one. 

This accelerates my path to scale, cash flow, and value creation. 

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I think about strong franchises like express lanes on a toll road. Not everybody wants to pay to use the express lane. 

But how valuable is it to you to arrive at your destination earlier?

If you’re rushing to the airport, it’s worth a few bucks.

You’re also considering: how bad is the traffic?

If the roads are clear, there’s not much incremental value to the express lane. If it’s bumper to bumper, the value of an empty express lane goes way up. 

There are similar variables when you’re looking at whether franchise fees and royalties are worth it to you. 

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Sometimes, people think about franchise fees like they’d look at a price list from any other vendor.

They might try to itemize every bit of value and justify what percentage of their revenue that is worth.

• Marketing and branding? Maybe that’s worth 3-4% of revenue.

• Training and support? Another 2%.

• Vendor relations and sourcing? 1% or so.

That mindset makes sense in theory, but it completely misses the point. 

You’re not paying for a bunch of line items. You’re buying a head start and an accelerated path to success.

When you get into a quality franchise system, you’re presented with shortcuts from day one.

They let you skip the 12-month phase where most small business owners are duct-taping software, fighting flaky vendors, and wasting time rebuilding tools that already exist elsewhere.

For me, paying Smash My Trash a small fortune for a truck meant that I could start on day one with a business model proven to work, instead of spending months coordinating international vendors, chasing parts, and tearing my hair out.

So I’m paying a percentage of revenue I wouldn’t otherwise be making.

What you’re really paying for: a path to execute instead of innovate.

The flip side

Of course, that only works if you’ve picked the right franchise. The kind where the system is built, the playbook works, and the leadership is truly there to build an enduring brand and not just to cash royalty checks.

Because the truth is, most franchise systems aren’t like that. 

They’ll charge you huge fees for Fiverr-level support (or worse). No systems. No leverage. Just a logo and a bill.

A friend of mine calls this “paying for artwork” and it’s an unfortunate reality for many franchisees in crappy systems (of which there are many).

There is no logo sexy enough to justify 8% of your revenue if you’re not getting real value in return.

So don’t evaluate the financial tradeoff in a vacuum. Ask:

• Will this system help me skip the startup phase?
  

• How quickly will this system accelerate my path to success?
  

• What would it cost me (in time, money, and mistakes) to build this on my own?

So yes, I’m happy to pay franchise fees when I’m getting something back. The shortcut is worth it.

Here’s my rule of thumb:

Will this franchise allow me to accomplish in 3 to 5 years what would otherwise take me 10 or 20?

If you’re just paying for branding and hope? Run.

→ Related read: the 5 types of franchise to avoid like the plague

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If you're weighing a franchise and wondering “is this worth it?”, that’s exactly what I help people figure out.

Book a call and let’s get started.

Thanks for reading!

Connor

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