For those without access to the details of franchise start-up costs, here's a primer. These numbers are taken straight from one of the larger franchisor Franchise Disclosure Document (FDD), and keep in mind, these fees are up front before you ever sign up a single tenant:
1. Initial Franchise Fee - $45,000.00 (Unless you are a current franchisee or purchasing multiple franchises, then you get the bargain basement price of only $35,500.00)
2. Site Evaluation Fee - $2000.00 per site you consider. If it does not meet their "standards", start over and pay another $2000.00 for EVERY ADDITIONAL SITE you look at.
3. Location Compliance Fee - $6000.00 this is the cost for the franchisor to review your space plan. This is NOT your architectural fee, which typically runs $18k-$25k. This is the fee you pay for the franchisor to REVIEW the plans.
4. Collection Book - $20.00 Required for every tenant. If you have 30 tenants in your building, that's an additional $600.00(!), for ... what? ... a ledger book? Have we never heard of spreadsheets and electronic processing?
5. Initial Inventory - $5000.00-$20,000.00 For this particular franchisor, you are required to purchase the franchise's own branded beauty products for your store. Never mind that these are not commonly-used products outside of this franchisor's domain, and that stylists typically like to use their own product sourced from their own suppliers, or that you would be competing with and undermining your tenants' ability to sell their own retail product and boost their own business success. But it DOES provide another potential revenue stream for the franchisor.
Of course, there are plenty of follow-on fees (training, television, education, suites tour technology(?), etc.). Some are optional, but our favorites are:
1. Royalties - Enough said on this one
2. Grand Opening Celebrity Request - This particular franchise attempts to promote one of their founders as some kind of "celebrity", and we suppose the assumption is that her mere presence at a site will draw screaming fans wanting her autograph, bringing the franchise added publicity. Or something.
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