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 business ideas looks at the cost of starting up a franchise.

Franchises can be a great way to start out in business when you don’t have a business idea of your own. There are many family friendly franchise opportunities available – and not all of then cost thousands of pounds. There are also many business that have been set up by mums, who are looking for other mums to buy a franchise into their business.

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 of franchises

The franchiser – the business that sells you the franchise – usually charges an up-front fee. If the franchiser 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 franchiser, 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 franchiser might have specific requirements.

Continuing costs of franchises

You usually pay a percentage of the sales revenue to the franchiser. 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 franchiser. 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 franchiser 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 the final part of a four-part series on family friendly business ideas – if you are serious about finding a flexible way of working, the How to Stay at Home and Earn Money guide.

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