How Much Does It Cost to Buy a Franchise in 2025?

Are you thinking of investing in a franchise? One of the main considerations when taking on this massive business venture is the cost. The reality is that buying a franchise is often more expensive than setting up your own business. But it does come with an already-established brand name so that you can see a profit earlier on in your venture rather than years down the line.

So, exactly how much does it cost to buy a franchise in 2025? In this article, I’ll go over the exact cost range for buying and setting up a franchise and give you some tips for cutting down your costs as well.

Key Takeaways

• The initial franchise fee is a one-time payment to the franchisor for the rights to operate under their brand, typically ranging from $10,000 to $50,000.
• Startup costs include expenses for real estate, equipment, inventory, and licenses, varying widely by industry and location.
• Franchisees must pay ongoing royalties, often calculated as a percentage of gross sales, generally ranging from 4% to 8%.
• Advertising fees, typically 2% to 4% of gross revenues, contribute to national or regional marketing efforts.
• Additional costs may include training fees, insurance, and working capital requirements, depending on the franchise agreement.
• Understanding these costs is crucial for evaluating the total investment required and ensuring the financial viability of a franchise opportunity.

How Much Does It Cost to Buy a Franchise?

Most franchisees need between $100,000 and $300,000 to get started, though depending on the brand and the company’s startup expenses, some can cost as much as $5 million. On the other hand, it is possible to set up a franchise for less than $10,000 in some rare cases.

Buying a franchise is by no means a cheap business venture, and you’ll definitely need a good amount of capital to get things started. That said, you’ll typically make a profit pretty quickly when compared with other business models.

Costs Associated With Buying a Franchise

The overall cost of buying a franchise includes many different expenses and fees. Here are some main costs associated with purchasing and setting up a new franchise business.

Franchise Fee

The first payment you’ll make when buying a franchise is the initial franchisee fee. You’ll pay this fee to the franchisor, which gives you access to the franchise system and seals the deal. While franchises generally charge a pretty hefty sum for the franchise fee, they don’t typically make much profit from the initial payment. This fee is typically reserved to help new franchisees get set up with initial marketing expenses, location selection, training, and other assistance.

Franchise fees range from around $20,000 to $50,000 on average. However, some are much lower, such as Chick-fil-A, which only charges an initial franchise fee of $10,000.

Property Costs

Another major expense you’ll need to consider when buying a franchise is the cost of renting or purchasing property for your business. Depending on your location, the cost of property may be one of your biggest expenses when purchasing a new franchise. As you might expect, this expense varies drastically and heavily depends on the size of property your franchise requires and your location. 

Most franchisees pay around $3,000 to $10,000 per month for rent, but naturally, this cost can be much more.

For example, the lease for a restaurant franchise in prime real estate in a major city could easily cost more than $10,000 per month. Additionally, you’ll typically need to pay 3 to 6 months of rent as a downpayment on the lease, which is a substantial amount of cash. 

Build-Out and Equipment

Once you purchase property or find a space to rent, you’ll need to follow brand guidelines and customize the space to ensure consistent branding across all franchise locations. This build-out process includes construction, interior design, signage, equipment, and professional fees, such as architects and builders.

The build-out expenses will vary depending on the type of franchise, the size of the location, and the state of the property.

For example, in a smaller location with non-specialized equipment, build-out expenses can be as low as $50,000. However, on the other hand, for a franchise that requires specialized equipment, such as a high-end restaurant, this cost can quickly rise to $1,000,000+ in some cases.

As an example, Pickleman’s Gourmet Cafe estimates the build-out and equipment expenses to cost $305,000 on the low end and $735,000 on the high end.

Initial Inventory

At this point, your franchise location is built out according to the franchisor’s brand requirements. You’ll also need to purchase the initial inventory to get the ball rolling, which will typically set you back around $5,000 to $50,000+. However, actual costs highly depend on the franchise.

For example, Bubbakoo’s Burritos estimates an initial inventory cost of just $6,000 to $12,000, while Hotshots Sports Bar & Grill estimates an initial inventory cost of $47,000 to $65,000.

Licenses and Permits

Before you can open your doors and start making sales, you’ll need to obtain the correct licenses and permits, depending on your industry and location. These can range from health permits and liquor licenses to business licenses and zoning permits.

You should budget anywhere between $100 and $3,000+ for licenses and permits for your franchise. For example, Duck Donuts estimates $100 to $2,000, and Nurse Next Door estimates $2,500 to $4,800. Make sure you research the requirements for your industry and area for a more accurate estimate and to ensure compliance.

Insurance

After investing a significant amount of money into buying and opening a franchise, you’ll want to protect it with insurance. As always, the type of coverage you need will differ according to your industry, but some basic coverages you’ll want include:

• General liability
• Worker’s compensation
• Property

The annual cost of insurance varies depending on factors such as location, size of business, industry, and number of employees. After all, a franchise that you can simply operate from home and doesn’t require additional employees will cost next to nothing in terms of insurance compared to a larger franchise business that employs workers, rents property, and has more health and safety risks overall.

However, insurance costs typically range from $1,000 to $10,000 or more. For example, a youth sports franchise like Skyhawks estimates insurance costs to range from $800 to $3,200.

Keep in mind that insurance is a cost that you will need to budget for yearly (or monthly) and is not a one-time cost to buy a franchise.

Marketing

While the franchise may already be an established name, it is still important to invest in some local advertising and marketing campaigns to establish the name and business in the community. In fact, this may be a requirement by the franchisor, depending on the franchise.

Furthermore, some franchisors may help with ongoing marketing efforts by taking a percentage of the gross sales (typically 1-4%) or charging a flat fee. For example, Burger King charges an advertising fee of 4%, while K9 Resorts charges a flat fee of $599 per month.

Marketing can range from print and online ads to social media marketing and grand opening events.

Initial marketing costs can range from $2,000 to $20,000+.

Hiring and Training

One final major cost to consider when buying a franchise is hiring and training staff. Training costs can add up, with many franchisors requiring franchisees to send their staff to specialized training programs to ensure consistent service across the board. During the initial franchise setup phase, the cost of training staff can vary widely from $100 to hundreds of thousands of dollars in some cases. For example, on two opposite ends of the spectrum, Pinot’s Palette’s expenses are $100 to $2,000, while Subway’s training expenses are $200,000.

Ongoing Fees to Consider

To hit the ground running with your franchise, you will also want to budget for at least the first three months of operations. Operating costs vary widely depending on the size of the franchise, industry type, and location. Estimate your monthly operating costs and make sure you have enough to remain financially stable after the initial setup phase.

These ongoing fees typically consist of royalty fees (generally 4% to 9%), utilities, supplies, maintenance, and wages.

Many franchisors provide information on the estimated investment amount for the first three months of operations. For example, Hounds Town USA, a doggy daycare franchise, estimates $30,000 to $60,000. And Melting Pot, a restaurant franchise, estimates $85,000 to $145,000 for the first three months.

Average Cost of Buying Popular Franchises

As you can see, the cost of buying a franchise is pretty wide. But if you’re looking at a particular industry, here are some of the average costs of buying these popular franchises by industry.

How to Get Financing for a Franchise

Most people don’t have an average of $100,000 to $300,000 to spend on opening a franchise. But just because you don’t have the cash on hand doesn’t mean your franchise dreams will go up in smoke. Thankfully, there are many financing options available for a franchise. Since a franchise is a lower-risk business venture than a start-up, it’s easier to convince others to lend you money for the business.

The most convenient way to get financing is through in-house financing, meaning the franchisor helps fund the franchise. This can range from getting funding directly from the franchisor’s pockets to getting funding from specific lenders that cooperate with the franchisor with typically lower interest rates.

Beyond this method of financing, you can also find money through:

• Standard bank loans
• SBA loans
• Crowdfunding
• Friends and family
• HELOC
• ROBS

To get financing for your franchise, make sure you have a good credit history and a strong business plan. You’ll also need some kind of collateral as well as a down payment.

Most importantly, when securing financing for your franchise, make sure to do your research and get as many quotes as possible so that you can find the best option for you.

Tips for Cutting Costs in a Franchise

Buying and opening a franchise is expensive, but there are ways to cut down on costs to help save you some money. I’ll divide these into ways you can save on startup costs and operating costs.

Here’s how you can cut your startup costs:

• Opt for a franchise resale: While franchise resales tend to come with higher initial fees, you won’t have to shell out as much to set up the business since it is already operational.
• Go second-hand: Rather than going for brand-new equipment, which can quickly rack up startup costs, look for high-quality second-hand items that still meet the standards your franchisor sets.
• Utilize free and digital marketing: Traditional marketing costs money. Instead, focus on more cost-effective (and free) marketing strategies, such as social media advertising and word of mouth, to get everyone excited about your grand opening.
• Negotiate with suppliers: Some franchisors work with a specific supplier and may have a fixed price, but in other cases, you may be able to negotiate a better deal with your supplier. Don’t be afraid to shop around or ask for bulk pricing if you can.

And here are my top tips for reducing franchise operating costs:

• Be energy-efficient: Energy bills can be a significant contributor to your operating costs, so invest in LED lighting and energy-efficient appliances for lower energy consumption.
• Prioritize retaining staff: High turnover rates can mess with the efficiency of your franchise (not to mention hiring staff costs $4,700 on average), so train well and keep your employees happy by focusing on thorough onboarding and offering opportunities for growth.
• Streamline operations: Are there any ways you can streamline your operations by automating tasks, utilizing AI, and reducing unnecessary steps? Invest in new technology and reorganize the workflow to increase efficiency.

Is Owning a Franchise Worth the Cost?

There’s no one way to answer the question of whether owning a franchise is worth the cost. It’s entirely up to you and what you prioritize. To determine whether or not this is a worthwhile business venture for your specific situation, consider all of the costs above while weighing the pros and cons of owning a franchise.

For example, some pros include immediate brand recognition, a less risky business model, and making profits more quickly. But on the flip side, you also have to deal with high start-up costs (as I’ve outlined extensively above), lack of control and creativity, and ongoing fees and expenses.

Know Your Franchise Costs with Franzy

While franchising is a proven and valuable way to nudge your way into entrepreneurship, it’s important to consider all the costs before jumping head-first. With everything I outline above, you should now have a much clearer understanding of exactly how much it costs to buy a franchise in 2025 so that you are not surprised by any costs down the line.

If you’re ready to jump into franchising, Franzy will hold your hand every step of the way. This is your one-stop shop for researching franchises to find the perfect franchise for you by comparing the franchises available all over the country.

Check out our franchising industry trends report for more data from around the sector.