Analysis Of Item 5 and Item 7 Costs Within Sectors

2015 Facts & Figures Report Published on May 14, 2015

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Analysis of the Initial Franchise Fee and Estimated Initial Investment will play a critical role in any prospective franchisee’s due diligence. Franchisors need to pay close attention that their investment range, coupled with unit economics, are within industry standards.

FranchiseGrade.com has calculated the average Item 5 Initial Franchise Fee and Item 7 Estimated Initial Investment for each sector in the franchise industry based on a sample of 2000 franchise systems.

There are minimal differences between franchise sectors within Item 5 Initial Franchise Fees. This is in contrast to Item 7 Estimated Initial Investment.

 

Item 5 Initial Franchise Fee

Initial Franchise Fee Minimum Maximum
Automotive $34,827 $44,457
Business Services $30,890 $41,963
Commercial & Residential Services $27,367 $44,854
Lodging $34,312 $47,775
Personal Services $34,312 $47,775
Quick Service Restaurants $31,086 $39,781
Real Estate $24,145 $42,850
Retail Food $25,141 $41,054
Retail Products & Services $25,238 $40,030
Table/Full-Service Restaurants $28,084 $42,680

Item 7 Estimated Initial Investment

 Estimated Initial Investment Minimum Maximum
Automotive $223,677 $1,312,008
Business Services $85,716 $216,794
Commercial & Residential Services $79,126 $183,405
Lodging $11,030,109 $31,402,388
Personal Services $157,677 $388,284
Quick Service Restaurants $276,658 $710,211
Real Estate $243,456 $765,116
Retail Food $332,665 $810,045
Retail Products & Services $194,816 $537,130
Table/Full-Service Restaurants $597,870 $1,588,427

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About the Author: Jeff Lefler
As the CEO of FranchiseGrade.com, Jeff understands that there is no Silver Bullet or sure-fire, simple way to pick a guaranteed franchise system winner. However, by using a little science and a lot of hard work, Jeff and the team at FranchiseGrade.com have developed a sophisticated research, analysis and comparison model to help potential investors and existing Franchisees assess a realistic value for any franchise system relative to others. It's called a Franchise Grade. With over fifteen years of small business experience and ten working in franchising as a multi-unit Franchisee, consultant and Franchisee Association President, Jeff has a good understanding of the level of hard work, dedication and commitment that drives a successful franchise system. As part of his ongoing involvement with the industry, Jeff also served as a Member of the Strategic Committee of the International Association of Franchisees and Dealers. Get in touch with Jeff to see how your system measures up at jeff.lefler@franchisegrade.com.


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