Franchise costs & fees
Understand franchise startup costs, recurring fees, reserves, and cash-flow timing without relying on unsupported industry averages.
Build the whole project budget
Separate investigation, pre-opening commitments, opening expenses, and continuing operations. Record an amount, source, and payment date for each material item. A franchise fee is only one potential component; premises, equipment, staffing, professional services, and operating cash may also matter. Use the specific FDD and current quotations rather than a generic cost range copied from another business.
Make uncertainty visible
Distinguish confirmed quotations from provisional allowances. Note what each amount includes and what needs clarification. Add a separately explained contingency rather than hiding unknown costs in a single buffer. The SBA’s startup-cost guidance recommends identifying expenses and distinguishing one-time from recurring costs. Your franchise model should add the actual obligations and timing that apply to the proposal.
Keep cash and profit separate
A budget total does not show whether cash is available when bills arrive. Model customer collections, supplier payments, deposits, financing, and reserves over time. Ask an accountant to explain the distinction between accounting expenses and cash movements. Keep household living resources separate from money committed to opening or operating the business.
Review the fee mechanism
Identify each percentage base, fixed charge, minimum, and payment schedule in the proposed documents. Model marketing contributions and systems charges separately from royalties where applicable. Use the fee article’s hypothetical example to understand the arithmetic, then replace every assumption with actual terms. This page provides an educational framework, not a brand price estimate or a forecast of profitability.
Source background: SBA official guidance. Reviewed September 17, 2026. The practical frameworks are editorial suggestions; consult qualified advisers about an actual transaction.