Why Understanding Total Investment Cost is Essential
Jim Gormley • December 16, 2020
Franchising can be a well paying and exciting career choice.
If you’re thinking about franchising in Canada you need to really understand the costs that you will have to pay. It’s best if you know what the costs are going to be when you start to research a franchise rather than at the end. If you know what the costs are, then you can decide what you can afford and which franchises and brands you can consider.
The total investment cost will vary based on the franchise segment (for example: retail; personal services; fast food; etc) and the brand that you choose within that segment.
So, What is the Total Investment Cost?
The total investment cost is typically shown as a range in the Franchisor’s Franchise Disclosure Document. It is the total of the Estimated Initial Investment. The range can include fees for a wide number of costs such as:
Franchise Fees
Real Estate or Rent
Insurance
Training
Computer Software
Furniture/Fixture/Equipment costs
These are just some of the costs among many. Be sure to find out exactly what the total investment cost covers by asking the franchisor for a full breakdown of the costs. Franchisors will be able to give you an accurate picture of what you can expect to pay.
It’s essential to know the total costs that are involved to ensure that the franchise is a good financial option for you. So, here are eight important money questions you need to ask to ensure that you make a wise financial decision.
Engaging a franchise lawyer at the right time in your franchise selection process can help you understand and work through important steps to help you make this important decision. This trusted advice and legal review can be critical to a franchisee’s long-term success.
Your ability to finance your franchise is a crucial first step along your franchise journey. A clear business plan will:
If you’re new to Canada and looking at starting a new business, a franchise resale may meet your needs. As a newcomer adjusting to life in a new country, a franchise resale may be less challenging than opening a brand new franchise.
Due diligence is essential to set you up for success. The research that you complete before going too far down the road will ensure your investment decision makes sense and avoid any surprises.
Franchising can be a great opportunity for you to operate your own business with reduced risk and support of a parent company.
