How Much Does It Cost to Buy or Open a Franchise?

You are interested in starting a franchise business, and you’re ready to take the next step. But before you sign on the dotted line, you probably have an important question. How much capital  will I need to buy a franchise? 

With over 4,000 different franchise opportunities, there are options for every level of investment - from a few thousand dollars to tens of millions. Once you’ve determined the type of franchise business you want to start, you’ll need to identify the money required to get started and the capital required to keep your doors open. It’s likely that you’ll need to also figure out how you’ll be paying for your monthly expenses, like your home and putting food on the table. In fact, this is where many new entrepreneurs are often tripped up. 

So, before you make a decision to buy a franchise, you’ll need to have three buckets of money filled. 

• Initial capital - What you need to get the doors of your business open and ready for customers.

• Working capital - What you need to keep the doors open until you begin to generate a profit.

• Home capital - What you need to continue to pay the bills at home while the business isn’t making a profit. 

The time it takes to become profitable or hit the break-even point varies from business to business. Service businesses that operate out of a home or small office have a low overhead and can become profitable within a few months. Businesses in a retail space, especially food concepts, typically take a year or longer to become profitable 

Because franchises already have a track record, you’ll be able to glean information on how long it may take to become profitable from franchisees who are already established.