Franchise costs - what is the cost of buying a franchise business?
Your question is not easy to answer. There is no scientific answer as to how much you should pay them. Rather, you have to make a judgment about the value of what they provide and whether the asking price is fair (and if you think it is not, don’t be afraid to offer to pay a fee less than what they are asking).
I suggest you put down on paper the advantages (and disadvantages) of buying a franchise as opposed to setting up your own business. That may help you decide whether you should buy the franchise. You should also in consultation with your accountant prepare some profit and loss forecasts, taking into account the franchise costs (initial and ongoing), to see whether the franchise business will be viable. And don’t forget to carry out due diligence on the franchisor and the business proposition.
I cannot be more specific than this, but if you do your due diligence and forecasts in conjunction with experienced franchising accountants and lawyers you will, I am sure, arrive at an informed decision about the franchise and the price to pay.
Tim Kilham, McLean Delmo Hall Chadwick