The Costs Associated With a Franchise For Sale Offer

February 21, 2019

If you are looking for a franchise in Pakistan for sale and come across franchise opportunities that have a very low fee for start up then be cautious. When you buy a franchise it is not just a matter of paying a one-off fee for the start up cost. There are ongoing costs that are involved in the operation of any franchise for sale. The most common cause of a franchise to fail is the lack of funds to cover these costs.

The franchises UK costs are mostly determined by the industry or sector that you are going into. The list of franchises in Pakistan vary hugely for start up costs, a major restaurant chain may need a start up fee of 200,000 pounds whereas a small home based franchise may only cost 5000 pounds. There is a range of costs within the same industry as well, you could pay a lot more for a prime location or the franchise might have grown significantly and therefore the franchise fee has grown. The greater the cost may be down to the franchisor offering a number of services and additional support so if you pay a lower fee then this level may not be the most beneficial. We will look over a few of the costs associated with a franchise for sale, these include one-off costs and ongoing costs.

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The franchise fee, this is the first payment you will make when buying the franchise, it will be set by the franchisor and will be paid on the signing of the franchise agreement. This fee allows you to use the franchises name and branding, in a lot of cases it also gains you access to the support and training of the franchisor along with their marketing and promotions.

Initial money investment, this will be money that you will put in additionally to the start up fee. In a certain number of franchises the franchisor will expect you to have about 30% of the start up fee as back up to qualify to buy a franchise.

Working capital, this is the money to support yourself and the franchise through the initial months of start up, not all franchises start earning money immediately and you need money to survive on until it does. Getting through the early months is essential to your business and there must be this capital or the franchise will fail.

Professional fees, I cannot emphasise how important it is to hire a franchise solicitor and accountant. These may be expensive to start off with but they will keep you within the boundaries of the taxman and make sure that you get the best franchise for sale.

Royalty fees, this will be an ongoing cost between you and the franchisor. This percentage, usually around the 5-10% mark, will be detailed in the franchise agreement and you and your solicitor should have negotiated this cost in the purchasing of the franchise.

There are other costs but it depends on the franchise business in Pakistan for sale that you buy, if you have premises then the premises costs like rent, utilities and insurance will be major costs. If you intend to employ staff then the payroll, taxes and training will be costs to you. Make sure you have the right backing and cashflow to take on a franchise as costs can vary hugely, make sure you are aware of all costs before signing that franchise agreement and taking that big step of buying a franchise.

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