Franchise Fee Can Be High, But Not $20 Million High

An Ameriprise financial advisor, Ylisa Sanford Seymour, says being laid off is the kick in the pants many people need to start their own business. The benefits of starting a business in a recession is that the down market can provide lower leasing and labor costs. Wise advice.

But then comes this flaw when she gets to the topic of buying a franchise.

“Certain franchises, such as large brand name ones that charge up to $20 million just to get the franchise license, are something you might want to stay away from.” – US News

Actually, franchise license fees typically range from $25,000 – $50,000. For example, Hardee's charges $25,000 per store to grant a franchise license. That's different than the cost to build out, equip, stock inventory, lease property and generally operate a restaurant, which is estimated at slightly over $1 million in total investment cost, not including the purchase of real estate property. So it’s hard to argue with Seymour’s logic of avoiding the purchase of a franchise during a recession that charges $20 million in just the franchise license fee.