Total cost of opening a franchise

Article by Cathryn Hayes

Revive! Auto Innovations

Start-up costs for opening a franchise can vary dramatically based upon the type of franchise involved and you will need to take account of costs from the lists below, which may be applicable.

• Initial franchise fee
• You may need to purchase or lease a liveried van
• Fund opening stock
• Leasing premises
• Refurbishment requirements
• Branding, fixtures and fittings
• Professional charges such as lawyer, architects and surveyor's fees
• Insurance
• Recruitment costs
• Marketing costs
• Working capital
• Training costs
• Ongoing management services fees

For an established franchise, most of the major banks will lend up to 70% of the start up costs, for new franchises the figure will be 50%. You will pay the borrowed money back over a period, usually 5 years, depending on circumstances.

Once you have established the figure for your own investment in the franchise, you can start preparing your business plan - this is a vital document to obtain finance from the bank. As part of your business plan, you will need to prepare cash flow forecasts for the first two years of the business. You need to be sure that you understand the figures, what they are based on and how much you will have to turnover in order to breakeven.