Best franchise opportunity costs

The costs of different franchises vary greatly, we have information on the best franchise opportunities and look at which type is the best for you

The cost of setting up as a franchisee varies widely. What type is the best franchise opportunity for you?

According to the British Franchise Association, the average cost of setting up a franchise is £42,200 (a figure that includes fees, working capital, equipment and fittings, stock and materials). Often, the best franchise opportunity will require a significant investment.

Businesses run from home, or operated from a single van, are cheaper than those requiring special premises, prime high street sites, technical equipment or a fleet of delivery vehicles. For example:

Oscar Pet Foods

This is a home-based pet-food delivery franchise, so there is no outlay for premises. Franchise fee for a 10,000 household area is £9,400 which includes training, logos, signwriting for the van, etc. Packages for areas with higher numbers of households cost more.Buying or leasing a van is also part of the package although this can be any size or model. You need another £3,000 working capital and insurance for sickness or accidents, from £12.50 monthly, is mandatory.

Total outlay: approximately £11,000.

Molly Maid

This cleaning franchise, where you manage a team of maids, has a £7,800 franchise fee. That covers £3,500 for logos, business knowledge, format details; £4,300 for a local market survey, accommodation while training, initial mailshots and advertising, stationery and uniforms. You also need £10,000 working capital for staff recruitment and training, ongoing advertising and £1,000 each for setting up three vans – leasing deposit, cleaning materials and equipment. You also need independent financial support in year one.

Total outlay: approximately £19,000

Kall Kwik

To start up a new Kall Kwik printing outlet costs £4,500 for the best franchise opportunity (although it is more common to buy an existing franchise, which would cost around £150,000). The best franchise opportunity package – including initial and on-going training, market surveys, property search and lease negotiation, design and shopfitting specifications for your centre, etc – adds £14,250.   But the big cost is £38,250 for specialist equipment like the press, camera, platemaker and guillotine, as well as leased digital print equipment. Then there is £8,000 for shopfittings, £6,000 for initial stock and stationery, and £7,000 for the marketing launch, which includes direct mail and telemarketing. Legal and accountancy fees are £5,000. Unusually for a UK franchise, the three-week training is in the US so you pay £1,500 for travel and accommodation there. Staff recruitment, vehicle deposit and pre-opening expenses add another £2,500 and VAT adds £15,000. You also need about £33,000 working capital.

Total outlay: £134,000.

McDonald’s

New McDonald’s franchisees have to buy an existing restaurant. Cost depends on profitability, regardless of location, and varies from around £150,000-£1 million. There is also a franchise fee of £30,000, a security deposit of £10,000 (usually returned after ten years), £10,000 for stock and £10,000 working capital. One unusual additional requirement is that you have to fund yourself throughout nine months full-time training. You are expected to come up with at least 25% of the total money yourself. But applicants with at least £30,000 ready cash can use it to get started in an outlet leased from McDonald’s, and have three years to come up with the 25% startup funds.

Total outlay: depends on profitability of outlet, but for one valued at £150,000 you pay about £200,000.

Contact details for the above franchises, and many of the best franchise opportunities, can be found in our Franchise directory.

Comments

You must log in or Sign up to post a comment.