Average costs for franchising

In Ireland, the turnover for franchising business amounts to around €1.6 billion. That is why the Bank of Ireland encourages the importance of the potential growth in the sector of franchising.

The average set up cost for a franchise may amount to €290k but the growth will soon amount to €350k for each outlet. Banks expect the potential owner to provide around 30 to 40% of the total investment.

The cost in starting a franchisee may be divided into two parts, the initial start up cost and the ongoing payments. The deposits for most of the franchises are refundable. You also have to pay the initial franchisee fee. You need to pay this fee for the right to use the brand of the franchisor. This fee is associated with every franchise. The franchise fee can sometimes be negotiated. The average fee for a franchise is around €20,000.

The main costs include the fitting of premises such as signage, fittings, equipment and other such items that are in the Franchisee Agreement. The average costs may go up to €250,000.

The ongoing costs include the regular annual or monthly fee. You have to pay irrespective of your turnover. This ongoing cost averages to around €1,000 every month. You would also have to pay the management or royalty fee which is around 7 to 8% net of VAT.