Trying to find a business that fits in with your family needs can be a
challenge, the last part in this series of family-friendly jobs looks
at the cost of starting up a business, with emphasis on franchises.

The costs of a franchise
When calculating the likely cost of a franchise, you need to take both initial and ongoing fees into account.

Initial costs
The franchisor – the business that sells you the franchise – usually charges an up-front fee. If the franchisor relies mainly on taking a percentage of your sales revenue, rather than on a high initial fee, it is usually a good indication that they have confidence in the value of their product or service.

Your largest initial costs are usually your investment in:

• premises
• equipment
• initial stock

You will need to establish a business entity. Although a franchisee holds a contractual agreement with the franchisor, each franchisee is an independent business, and it is this business entity that will enter into the franchise agreement. Your chosen business structure could be a limited company, partnership or sole trader – each of which will involve different costs – or your franchisor might have specific requirements. See our guide on legal structures: the basics.

Continuing costs
You usually pay a percentage of the sales revenue to the franchisor. Alternatively you may pay a management fee of some kind.

Under the terms of the franchise agreement, you may have to purchase stock from the franchisor. Check what they charge. They may mark up the prices – or they may be able to offer them to you at a discount because of their purchasing power.

You also have to pay the usual business costs – for example, rent for premises, utilities or the costs of any employees you take on. Again, check if the things that you pay for through the franchisor have a realistic cost.

Check, too, if the agreement includes additional charges. For example, you may be required to pay for training, or to contribute to the cost of national advertising campaigns.

This is part of a series of articles, be sure to catch the rest of the series!

{{post id=”business-ideas-to-fit-in-with-family-life-part-1″ text=”Part One”}}

{{post id=”business-ideas-to-fit-in-with-family-life-part-2″ text=”Part Two”}}

{{post id=”business-ideas-to-fit-in-with-family-life-part-3″ text=”Part Three”}}

{{post id=”business-ideas-to-fit-in-with-family-life-part-4″ text=”Part Four”}}

{{post id=”business-ideas-to-fit-in-with-family-life-part-5″ text=”Part Five”}}

Information supplied by Business Link
For more information on franchises, visit Franinfo

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