How much does a good franchise actually cost?

Morning folks,

Here’s a question I get all the time: 

How much does a good franchise actually cost?

Note that I say “good”. Because as I’ve said before, 90% of franchises are hot garbage. There are a ton of brands out there that will be happy to help you throw $50K–$500K down the drain. 

But I’m not going to get pedantic on you. 

Let’s take a look at the ballpark costs, and what you should look at beyond the upfront sticker price.

Let’s dig in.

High level figures

Zooming way out, here’s what you’re looking at: 

• For a brick and mortar franchise, you’re looking at $300K–$800K+.

That’s stuff like wellness, boutique fitness, child enrichment, and food businesses (which I do not recommend!). Real estate, equipment, and building costs drive these numbers up fast.

• For a non-brick & mortar franchise, it’s more like $150K–$350K.

These are typically home services, B2B operators, pet care, etc. Leaner footprint, faster ramp-up.

But here’s the thing — the upfront costs and franchise fee are just one part of the equation. 

The real cost depends on how you structure and scale the business. Let’s take a look.

4 huge cost levers

How you approach these factors will have a massive impact on your overall cost. But remember: costs aren’t inherently bad. Spending more in the right areas can make your business healthier, more profitable, and more resilient.

1. Owner Involvement

If you’re running your business full-time, you can usually spend less upfront. You’re working a job, so you’re covering roles that would otherwise need salaried staff.

But if your goal is executive ownership (i.e. manager-run), build in more capital for payroll from Day 1. Freedom isn’t free.

2. Number of Territories

Obviously, buying more territories is expensive. But buying 3 territories doesn’t mean 3x the cost. 

Especially in non-brick & mortar businesses, there can be huge economies of scale — you may be able to run multiple territories from the same office or team.

You will, however, have to pay additional franchise fees and need more working capital and marketing to cover that expanded footprint.

3. Marketing

How aggressive do you want to be out of the gate? 

Some brands require a minimum spend. Others leave it up to you. But under-spending here is a rookie mistake. Your pipeline is your business.

4. Working Capital

Never forget this mantra: Whatever you think you’ll need… add more.

Working capital is what keeps the lights on until you're cash-flowing. And if you're undercapitalized, you're going to be making bad decisions fast… cutting marketing, skipping hires, running scared.

That’s a one-way ticket to regret.

We’re not talking about cash

Even if a franchise costs $400K on paper, that’s not necessarily what you’ll need in cash. 

Most people without Walter White levels of cash use SBA loans, which usually require 15–20% down. So a $400K investment might only need $60K–$80K in equity, with the rest financed.

Other folks use ROBS (401(k) rollovers) to tap their retirement funds without triggering a tax event, or even a combination of ROBS and SBA.

If you’re at this point, I’m happy to connect you with a financing professional who knows franchising inside and out — book a call and let’s talk about your needs.

Final thought

The people I work with generally have about a $250K net worth, and $100K liquid capital. 

At those figures, you have lots of options open to you, and don’t have to pass up a great opportunity if it’s a little more expensive.

Because ideally you’re buying something that fits your endgame, not squeezing to fit your wallet today.

(If you haven’t read this article, check it out: Only buy what fits your endgame.)

Questions? Comments? Hit reply and I’d love to hear from you.

Connor

P.S. If you’ve got those kinds of funds, and you’re ready to buy a franchise in the next 90 days, book a free strategy call and let’s get the ball rolling for you!

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