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What is a Franchise Fee


What is a franchise fee

One of the best ways to get a fully operational and set business place is investing in a franchise. Brands which sell franchise let you use their brand name and operate on their behalf. To get this legal right, a franchise fee is to be paid. Now you must be thinking, what is a franchise fee?

What is a franchise fee?

In return for the legal rights, upon entering into a franchise agreement with the franchisor as a franchisee, you have to legally agree to pay the franchisor some amount of money as a one-time entry fee. This fee required for entering into a franchise agreement is called the franchise fee. It should be clear that even after paying the initial franchise fee the party which is the franchisee still has to pay the franchisor one or more regular ongoing fees as per the agreement. 

The Franchise Fee (also known as “initial franchise fee”) is a type of one-time payment given by a franchisee towards the franchisor for enrolling to the franchise system. This is usually done by signing the Franchise Agreement which is a legally binding agreement stating all the terms and conditions and the names of all the parties involved. The franchise fee is generally a predetermined flat payment amount in contrast to a percentage royalty. This is used by the franchisors to offset the cost of the franchisee start-up, their marketing, and other various expenses borne by the franchisor.

How much is a typical franchise fee and what it is used for?

The minimum amount for the franchise fee has to be $500 and it can go up to any amount as per the brand name and popularity of the franchise. The fee is generally in the price range of about $10,000 to $50,000, though the franchise fee of the franchisors high up in the popularity chart can be much higher.

The franchise fee is typically set by the franchisor at a price level which allows them to market their business opportunities to the interested franchisees, pay the commission amounts to the franchise salespeople, and lets them procure enough resources which are necessary to give the initial support to the investing franchisees. This initial support includes the initial technical knowledge and franchise training, on site visits to approve the franchisee’s business setup site and keep a close watch on the site development, initial marketing and advertising, and providing opening help and support.

PuffCity for best franchise opportunities

If you want to invest in a franchise with low franchise fee and high returns, then PuffCity is the perfect choice for you. Puffcity offers best low cost franchise opportunities to local businesses enabling them to build successful business places in the least amount of time. The help and support provided to the franchisees is also the best. The franchisees are assured of the best quality assistance and franchise training in return for a very low franchise fee. Contact PuffCity to know more about franchise opportunities.