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.<\/p>\n\n\n\n
So, exactly how much does it cost to buy a franchise in 2025? In this article, I\u2019ll 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.<\/p>\n\n\n\n
Most franchisees need between $100,000 and $300,000<\/a> to get started, though depending on the brand and the company\u2019s 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.<\/p>\n\n\n\n Buying a franchise is by no means a cheap business venture, and you\u2019ll definitely need a good amount of capital to get things started. That said, you\u2019ll typically make a profit pretty quickly when compared with other business models.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n The first payment you\u2019ll make when buying a franchise is the initial franchisee fee<\/a>. You\u2019ll 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\u2019t 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.<\/p>\n\n\n\n Franchise fees range from around $20,000 to $50,000 on average<\/a>. However, some are much lower, such as Chick-fil-A<\/a>, which only charges an initial franchise fee of $10,000.<\/p>\n\n\n\n Another major expense you\u2019ll 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. <\/p>\n\n\n\n Most franchisees pay around $3,000 to $10,000 per month<\/a> for rent, but naturally, this cost can be much more.<\/p>\n\n\n\n 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<\/a>. Additionally, you\u2019ll typically need to pay 3 to 6 months of rent as a downpayment<\/a> on the lease, which is a substantial amount of cash. <\/p>\n\n\n\n Once you purchase property or find a space to rent, you\u2019ll 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.<\/p>\n\n\n\n The build-out expenses will vary depending on the type of franchise, the size of the location, and the state of the property.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n As an example, Pickleman\u2019s Gourmet Cafe estimates the build-out and equipment expenses to cost $305,000 on the low end and $735,000 on the high end<\/a>.<\/p>\n\n\n\n At this point, your franchise location is built out according to the franchisor\u2019s brand requirements. You\u2019ll 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.<\/p>\n\n\n\n For example, Bubbakoo\u2019s Burritos estimates an initial inventory cost of just $6,000 to $12,000<\/a>, while Hotshots Sports Bar & Grill estimates an initial inventory cost of $47,000 to $65,000<\/a>.<\/p>\n\n\n\n Before you can open your doors and start making sales, you\u2019ll 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.<\/p>\n\n\n\n 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<\/a>, and Nurse Next Door estimates $2,500 to $4,800<\/a>. Make sure you research the requirements for your industry and area for a more accurate estimate and to ensure compliance.<\/p>\n\n\n\n After investing a significant amount of money into buying and opening a franchise, you\u2019ll 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\u2019ll want include:<\/p>\n\n\n\n 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\u2019t 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.<\/p>\n\n\n\n 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<\/a>.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n 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%<\/a>, while K9 Resorts charges a flat fee of $599 per month<\/a>.<\/p>\n\n\n\n Marketing can range from print and online ads to social media marketing and grand opening events.<\/p>\n\n\n\n Initial marketing costs can range from $2,000<\/a> to $20,000+<\/a>.<\/p>\n\n\n\n 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\u2019s Palette\u2019s expenses are $100 to $2,000<\/a>, while Subway\u2019s training expenses are $200,000<\/a>.<\/p>\n\n\n\n To hit the ground running with your franchise, you will also want to budget for at least<\/em> 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.<\/p>\n\n\n\n These ongoing fees typically consist of royalty fees<\/a> (generally 4% to 9%<\/a>), utilities, supplies, maintenance, and wages.<\/p>\n\n\n\n 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<\/a>. And Melting Pot, a restaurant franchise, estimates $85,000 to $145,000<\/a> for the first three months.<\/p>\n\n\n\n As you can see, the cost of buying a franchise is pretty wide. But if you\u2019re looking at a particular industry, here are some of the average costs of buying these popular franchises by industry.<\/p>\n\n\n\n Sign up for our free email newsletter. It’s a 5-minute read once a week to help you level up on the franchising industry.<\/p>\n\n\n\nCosts Associated With Buying a Franchise<\/h2>\n\n\n\n
Franchise Fee<\/h3>\n\n\n\n
Property Costs<\/h3>\n\n\n\n
Build-Out and Equipment<\/h3>\n\n\n\n
Initial Inventory<\/h3>\n\n\n\n
Licenses and Permits<\/h3>\n\n\n\n
Insurance<\/h3>\n\n\n\n
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Marketing<\/h3>\n\n\n\n
Hiring and Training<\/h3>\n\n\n\n
Ongoing Fees to Consider<\/h3>\n\n\n\n
Average Cost of Buying Popular Franchises<\/h2>\n\n\n\n
Franchise<\/strong><\/td> Franchise Industry<\/strong><\/td> Average Franchise Fee<\/strong><\/td> Average investment<\/strong><\/td> Average Royalty Fee<\/strong><\/td><\/tr> McDonald\u2019s<\/a><\/td> Fast Food<\/td> $45,000<\/td> $522,500 – $2,642,000<\/td> 4% – 5%<\/td><\/tr> 7-Eleven<\/a><\/td> Convenience Store<\/td> $1,000,000<\/td> $139,750 – $1,363,000<\/td> 0%<\/td><\/tr> HR Block<\/a><\/td> Tax Preparation<\/td> $2,500<\/td> $31,700 – $158,137<\/td> 20% – 60%<\/td><\/tr> UPS Store<\/a><\/td> Shipping<\/td> $29,950<\/td> $209,195 – $495,945<\/td> 5%<\/td><\/tr> Dunkin\u2019 Donuts<\/a><\/td> Fast Food<\/td> $40,000<\/td> $526,900 – $1,832,500<\/td> 5.9%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n Want Franchising Insights Straight To Your Inbox?<\/h4>\n\n\n\n