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What is a franchise fee?

A franchise fee is an upfront, one-time fee a franchisee pays a franchiser for the right to operate and profit from a franchise branch of the franchiser's broader organization. Franchise fees tend to vary from business to business, and fees are dictated by a combination of factors. For one, franchisors need to set fees they can profit from.

How much does a franchisee pay?

The franchisee pays at least $500 to the franchise owner before starting the business or within six months of operation. A franchisee, also called a subfranchisor, must pay the required franchise fee in exchange for the right to continue a business or enter into a new business under an agreement maintained by the franchise owner.

Should you pay a franchise fee?

They’re the cost of entry. Paying the upfront franchise fee unlocks the door to the franchisors’ proprietary business systems and more. You get the complete setup. The franchise fee is literally a license to own and operate the franchise business. That’s why you must pay it.

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