If you’re considering opening up a franchise, you are going to have a lot of T’s to cross and I’s to dot. Indeed, managing a business is one of the toughest professions out there. It’s also the soul of the American entrepreneurial spirit. And if you have the knack for it, you could make a very handsome living. However, if you don’t know what you’re in for, then you could suffer the fate of many before you and find yourself filing for bankruptcy and pulling out the old resume file. If you’re not to keen on the financial end of things, here are some costs to consider when opening up a franchise.
Make sure that you factor in the cost of actually opening your franchise – there is typically an upfront fee that buys you into the franchise. From there you will need to pay for permits, business licensing and all kinds of other expenses related to your particular business. If you don’t know what all of that is going to cost you well in advance, then you should start writing checks.
Make sure that you consider the permit costs – most businesses require that you have a permit to start doing business. If you are in need of a liquor license, it could cost a fortune, depending on your city. Liquor licenses, like many other licenses, can range dramatically in price depending on where you live.
Make sure that you factor in the setup costs – for instance, you will need to lease a retail space and you will need to install the equipment. You need to find that fine line between equipment that is moderately priced and equipment that will last you a long time. If you try to cut too many corners it could end up costing you a lot more in the long run.
Make sure that you consider the monthly fees to your franchisor – when you open a franchise business, you typically owe a monthly fee that goes to the parent company. This may be a flat fee or it may be a percentage of what you make each month. Be sure you know exactly what they will expect of you and whether or not it is reasonable. You should feel as though all aspects of your contract are fair and within reason.
Make sure that you consider the costs of human resources – it doesn’t matter if you are on any franchise website, you will have to pay for employees. For instance, you will need managers, sales staff and other members of your workforce to keep your franchise running. You don’t want to hire too many people and find that you’re paying more for labor than you’re making in sales. But you also don’t want to upset your customers by being under staffed. They will recognize that your employees are overworked and they don’t want to support your business if they don’t feel that you respect your staff.