The advertised franchise fee is easy to see. The full cash requirement is not. A realistic budget should separate one-time startup expenses from the cash needed to survive the first months of operation.
Seven cost buckets
- Franchise and licensing fees
- Lease deposit and rent
- Construction and store build-out
- Equipment and technology
- Opening inventory
- Pre-opening payroll and training
- Working capital until the store stabilizes
Do not ignore recurring fees
Royalties, marketing contributions, software, delivery platforms and required suppliers can materially change the unit economics.
SOHOFRANCHISE View
Before signing, model a downside case with slower sales and several months of additional cash burn. A franchise is still an investment with no guarantee of success.
Reference
U.S. Federal Trade Commission — A Consumer’s Guide to Buying a Franchise