The decision to become a franchise owner is an exciting one – but it can also be overwhelming. It probably feels like you encounter expenses at every turn. Knowing what costs you’re likely to incur is an important first step in planning for the success of your business.
Franchise costs can be broken down into upfront costs and ongoing costs. Identify your potential expenses by talking with your franchisor and interviewing other franchisees. In-person visits to other franchisees are an invaluable part of this process.
Upfront expenses are those costs you’ll encounter in the process of getting your franchise up and running. They include:
- The initial franchise fee.
- Construction fees, including architects, contractors, décor, etc.
- Operational fees, such as the sign company, alarm company, operating systems, etc.
- Legal and accounting fees.
- Fees to establish your business entity.
- Any applicable state and local fees.
- Opening celebration costs.
Your ongoing expenses are the day-to-day costs of doing business. They include:
- This will be one of your largest expenses, and one that will need to be carefully managed.
- Royalty fees.
- Marketing and advertising. Your franchisor will provide you with proven marketing strategies and materials – but they’re not free.
- Mortgage or rent.
- Keep in mind that your utilities may vary significantly at different times of the year.
- Loan repayment.
Keeping up with the myriad expenses of a franchise can be challenging. A cloud-based ERP solution like Sage Intacct can help you manage your franchise costs with real-time data and reports customized to your specific needs. You gain the comprehensive view you need for your entire franchise business and the ability to easily aggregate and analyze critical data from multiple sources so that you have a clear understanding of your financial picture. Want to know more? Call MicroAccounting today at 855.876.3773.