For most franchises, total initial investment falls between $50,000 and $200,000, including a one-time franchise fee of $20,000 to $50,000. Home-based concepts begin near $10,000, while full-service restaurants, childcare centers, and hotels exceed $1 million. The specific brand's actual figure is in item 7 of the FDD.
How Much Does It Cost to Buy a Franchise?
Opening a franchise requires funding three separate costs, not one: the franchise fee; build-out and equipment, which usually cost far more; and six to twelve months of working capital before the unit supports itself. Most brands total $50,000 to $200,000, while full-service restaurants and hotels run past $1 million.
Franchise cost ranges at a glance
- Low-cost (home-based/mobile): $10,000 - $50,000
- Most common franchises: $50,000 - $150,000
- Restaurant/auto services: $200,000 - $1,800,000
- Hotels: $1,000,000 - $5,000,000
Key cost components:
- Initial franchise fee: $15,000 - $90,000 mark the extremes across brands and formats, and the typical range is noted above
- Ongoing royalties: 4-12% of gross sales
- Marketing fees: 1-5% of sales
- Real estate, build-out, equipment, inventory
- Working capital for the first 6-12 months
In these numbers, the greater risk is putting a million dollars into a site that was never going to succeed.
I'm Clyde Christian Anderson, and I founded GrowthFactor.ai. While in my family's business at 15, I made my first retail real estate evaluations and learned early that a franchise's costs depend heavily on the location you sign for. Investment banking at Wells Fargo and BDT & MSD came next, followed by creating GrowthFactor for retailers and franchises making site decisions.
What You Pay at Each Stage of Buying a Franchise
Funds leave your account in stages, not in a single payment. Most cost guides give you one total investment range and stop there. That doesn't show when cash is needed or what you can still walk away from. The sequence below shows the order.
1. Discovery and FDD review: $2,000 to $5,000, plus travel. The franchisor provides the Franchise Disclosure Document at no charge, and the law requires delivery at least 14 days before you sign anything. At this stage, your cost is professional review: a franchise attorney and an accountant examine Item 7 (total investment), Item 6 (ongoing fees), and Item 19 (financial performance) with you. Most brands also invite serious candidates to a Discovery Day at headquarters, with travel paid by you. This is the least expensive point to walk away and the costliest one to rush. The FTC's $17 million settlement with Xponential Fitness in March 2026, involving misrepresented opening timelines and FDD delivery violations, remains a current reminder of the cost of skipping review.
2. Application and deposit: often $5,000 to $25,000. Many brands collect a deposit after accepting your application, then apply it to the franchise fee when you sign. Review the refund terms closely: some deposits are fully refundable, while others aren't refundable at all.
3. Signing: the full franchise fee comes due. For Subway, the figure is $15,000; Dunkin's is $40,000, while McDonald's is $45,000. This entry ticket is usually the smallest line in your budget.
4. Site selection and lease: 3 to 6 months of rent up front. There's the security deposit, first and last month's rent, often several additional months paid in advance, and legal fees tied to the lease. That's where two franchisees under the same brand begin to diverge: the market you choose determines rent, not the franchisor.
5. Build-out and equipment: the largest single expense. For any concept with a physical location, this expense far exceeds the franchise fee and is most exposed to construction-market changes. Franchisors publish a range because they don't know your landlord's shell condition, local labor rates, or the permitting costs set by your municipality.
6. Training and pre-opening: $5,000 to $25,000 beyond the fee. Typically, the franchise fee pays for the training program, but not the travel, lodging, or wages of staff you're paying to attend class.
7. Opening: six to twelve months of working capital. A unit reaches cash-flow positive status only after payroll, rent, inventory, and utilities come due. First-time owners most often budget too little for this line, and the resulting gap closes units that otherwise would have been viable.
How Much Does It Cost to Open or Start a Franchise?
Starting a franchise involves much more than paying the franchise fee. Including real estate, build-out, equipment, inventory, and working capital, the total opening cost for most franchises falls between $50,000 and $500,000, while full-service restaurants or childcare centers often go beyond $1 million.
People treat "cost to open a franchise" and "cost to start a franchise" as interchangeable, and the answer is the same for both: budget for the total initial investment in Item 7 of the FDD, rather than the headline fee. Our guide to how to buy a franchise separately covers the steps a buyer takes from shortlist to signed agreement.
Build-out costs and rent can vary so much from one market to another that opening the same brand in a dense metro can cost close to twice what it costs in a secondary market. That location-level variation makes modeling the economics before you sign as important as choosing the brand, with careful franchise site selection and a clear financing plan at the top of your checklist.
Average Franchise Cost by Industry
Franchise models cover nearly every price point. Startup costs for home-based and mobile operations can range from $10,000 to $15,000, while a traditional McDonald's restaurant requires roughly $1.5 million to $2.7 million. Most fall between $50,000 and $150,000.
The franchise sector is expected to add roughly 12,000 net new establishments in 2026, bringing the total to about 845,000 units and $921 billion in economic output, with employment close to 8.9 million, per the IFA and FRANdata 2026 Franchising Economic Outlook. This expansion creates real opportunity, but it also increases competition for the best sites.
| Industry Sector | Initial Investment Range (Approximate) | Example Brands (US) |
|---|---|---|
| Home-Based/Mobile Services | $10,000 - $50,000 | RE/MAX (Real Estate, fee $17,500-$37,500; total $45,000-$245,500), Carson Dunlop Home Inspection ($40,600-$49,400) |
| Retail (Non-Food) | $50,000 - $2,000,000 | Ace Hardware ($611,928-$2,018,550, leased-premises start-up), 7-Eleven (fee $25,000; total varies widely by store) |
| Quick-Service Restaurants (QSR) | $200,000 - $1,800,000 | Subway ($199,135-$536,745), Dunkin' freestanding ($443,000-$1,832,500) |
| Full-Service Restaurants (FSR) | $500,000 - $2,700,000+ | McDonald's ($1,471,000-$2,728,000, traditional restaurant) |
| Health/Fitness/Beauty Services | $150,000 - $1,400,000 | Orangetheory Fitness ($822,292-$1,400,000), Massage Envy ($719,350-$1,081,000) |
| Childcare/Education | $400,000 - $1,000,000+ | Kiddie Academy ($405,000-$915,000 leasing scenario) |
| Hotels | $1,000,000 - $5,000,000+ | New-build hotels commonly require $1-5 million |
Brand figures for each company reflect its current published FDD Item 7 disclosures; ranges vary by market and store format.
Food Service: QSR Versus Full-Service
Quick-service and full-service restaurants occupy different investment tiers, so "lower cost" remains relative. Subway publishes a franchise fee of $15,000 and total initial investment ranging from $199,135 to $536,745. Per location, it wants at least $150,000 in net worth and $100,000 in liquid assets. Dunkin' lists a $40,000 fee and $443,000 to $1,832,500 total investment for a freestanding restaurant, and asks for $250,000 in liquid assets plus $500,000 in net worth.
Full-service concepts require a significantly larger investment, with more extensive build-out, specialized kitchen equipment, larger dining rooms and additional permits. A traditional McDonald's restaurant has an initial franchise fee of $45,000, while total investment ranges from $1,471,000 to $2,728,000. If you're using an older guide, update the royalty: McDonald's increased it from 4% to 5% for new franchisees effective January 1, 2024, the first increase in roughly 30 years. For a purchase today, 5% is the applicable number.
Beverage-led concepts rank below both tiers, with a boba tea franchise running from $169,000 to $650,000 because the format has a counter and build-out rather than a kitchen and dining room.
Full-service concepts require greater capital, yet can generate higher revenue per unit; restaurant franchise growth strategy examines that tradeoff in detail.
Retail and Service Franchises
Home-based and mobile operations have the lowest overhead because they don't require a kitchen or stocked inventory. RE/MAX has an initial franchise fee of $17,500 to $37,500 and total investment between $45,000 and $245,500, per its FDD filing. Home inspection and consulting concepts work the same way.
Physical-location retail franchises escalate quickly because inventory, store construction, and fixtures are all due at the same time. For initial inventory alone, a retail franchise might need $25,000 to $125,000. Ace Hardware estimates $611,928 to $2,018,550 for a new leased store. Its fee model merits a closer look: as a cooperative, Ace has no traditional royalty and instead returns year-end profit distributions to member-owners. Over a ten-year hold, that shifts the math considerably against a percentage-of-sales royalty.
Service franchises such as Orangetheory Fitness and Massage Envy occupy the middle, with specialized equipment and dedicated build-out. Whether the shortlist includes real estate franchises or a retail storefront, its "average" blends unlike cases and shouldn't guide the budget directly.
Ongoing Costs: Royalties, Marketing, and Technology
For franchise owners, royalties are the largest recurring cost, and they compound in a way the upfront investment doesn't. Across the industry, they range from 4% to 12% of gross sales. The marketing-fund contribution usually comes on top, not within that amount. Rates published by three of the most searched brands show how broad the range is:
| Brand | Royalty | Advertising Fund | Combined |
|---|---|---|---|
| McDonald's (new franchisees) | 5% | ~4% | ~9% |
| Dunkin' | 5.9% | 5% | 10.9% |
| Subway | 8% | 4.5% | 12.5% |
For a Subway unit generating $1 million annually, the combined 12.5% sends $125,000 to the franchisor before rent, payroll, or food cost. With Dunkin's structure, the same unit sends $109,000 instead. That difference exceeds most franchise fees and recurs each year the unit operates.
Royalties aren't the only expense to include. Technology fees also belong in the budget: point-of-sale systems, the franchisor's management software, online ordering, and loyalty platforms commonly cost a few hundred dollars per unit each month. That's an industry estimate, not a published standard. The binding figure appears in Item 6 of the FDD. franchise analytics tracks what those systems return.
What a Franchise Costs Over Five Years
Over five years, a franchise's cost is driven mainly by royalty payments, rather than the entry fee. With $1 million in annual sales, Subway's combined 12.5% sends $625,000 to the franchisor, compared with a one-time fee of $15,000. Dunkin's 10.9% sends $545,000 against $40,000, while McDonald's roughly 9% sends $450,000 against $45,000.
The upfront franchise fee usually comes first in brand comparisons, while buyers leave the royalty for last, even though it is larger by an order of magnitude. At signing, McDonald's upfront charge exceeds Subway's by $30,000, while its combined ongoing fees are 3.5 points lower. On a $1 million unit, that difference is recovered in about ten months, and the gap grows each year thereafter.
That calculation has two limits. It assumes a $1 million unit, and annual volume drives the result: at $600,000 of sales, Subway's combined draw drops to $75,000 per year, even though it weighs more against a smaller revenue base. The calculation also leaves out technology fees, which Item 6 of the FDD identifies separately from royalties.
The five-year outlook also shifts where diligence should focus. Item 19 identifies what units in the system actually sell, while the trade area determines where a specific unit sits within that distribution. Because the royalty percentage is applied to volume, the site sets the amount of every ongoing payment shown in the chart above.
Financial Qualifications and Payback Expectations
Before assessing fit, franchisors check prospective buyers' financial staying power; lenders then conduct a second review. Minimums begin at about $30,000 in liquid assets and rise by concept, reaching $250,000 or more for childcare and restaurant brands. The two-to-three-year payback period often cited in franchise press is weaker evidence than most buyers assume.
Liquid capital and net worth. Franchisors generally set liquid-asset requirements at $30,000 to $100,000 or above, depending on the concept. Subway requires $100,000 liquid and $150,000 net worth; Dunkin' requires $250,000 and $500,000, and Kiddie Academy asks $250,000 liquid and $750,000 net worth for its leasing scenario. The reason is that undercapitalized units fail during the ramp, rather than at opening.
Financing. Under an SBA 7(a) loan, a start-up business must provide at least 10% in equity under SBA SOP 50 10 8. Conventional bank lenders, by comparison, typically require 20% to 30% down. That SOP is being replaced: SOP 50 10 8.1 takes effect October 1, 2026, so buyers with loans numbered on or after that date should verify the requirement with their lender. When operators combine both programs, the total 7(a) and 504 ceiling doubled to $10 million on July 4, 2026. The SBA also reinstated its Franchise Directory in 2025, and lenders generally check that a brand is included in the current edition, effective September 9, 2026, before approving a 7(a) loan. Rates carry more weight in 2026 than they did when many of these guides were written. The SBA's optional peg rate reached 4.75% for the third quarter of 2026, putting 7(a) rates in the high single to low double digits. On a $400,000 build, a two-point rate gap means meaningful money each month. Our guide to financing a franchise covers 7(a) loans, conventional debt, franchisor financing, and 401(k) business financing (ROBS).
Payback. Franchise press repeats the idea that profitability takes two to three years, but that figure is a rule of thumb, not the result of rigorous study. No SBA or IFA research supports it. Payback is determined by the brand's unit economics and the site. Before signing, Item 19 of the FDD is the only available brand-specific evidence; if it's limited or missing, existing franchisees provide the data.
The Costs Most Buyers Underestimate
On franchise builds, budget overruns regularly show up in three areas: legal review of the Franchise Disclosure Document at $2,000 to $5,000; build-out costs exceeding an Item 7 range set before current construction pricing; and the second location, where the method used for the first store turns out to have been luck.
Legal review. If a franchise attorney reviews your FDD, expect fees of $2,000 to $5,000, with higher costs for a complex or multi-unit deal. In this process, saving that fee by skipping the review is the single worst trade. Our guides to FDD disclosure and obtaining a free Franchise Disclosure Document explain what to read first.
Build-out overruns. The franchisor's Item 7 range reflects system averages. It doesn't account for your landlord's shell condition, your municipality's permitting queue, or what materials cost today. Materials pricing changed in 2026: Cushman and Wakefield estimates tariffs have raised construction materials costs 6.0% against a 2024 baseline, with total project costs up 3.0%. That's below the 9.0% peak in summer 2025, but many FDDs still use ranges prepared before that shift. For a $400,000 build-out, three points is $12,000 you didn't budget for. Ask franchisees who opened in your region this year what they actually spent, rather than what the FDD projected.
The second location. The second unit generally requires more attention than the first. Across our customers, this is the pattern we see most: the initial store often succeeded because the founder personally knew the neighborhood, not because of a repeatable method, and there isn't another neighborhood like it. Consistently evaluating a trade area before signing the lease, rather than afterward, is what turns one successful store into a portfolio. Cavender's opening pace tripled, increasing from 9 new stores in 2024 to 27 in 2025, with every new location performing at or better than expected.
Frequently Asked Questions about Franchise Costs
How much does it cost to buy a franchise?
Most franchises cost $50,000 to $200,000 in total initial investment. The one-time franchise fee inside that figure is usually $20,000 to $50,000, which is why buyers who budget from the fee alone come up short. Home-based and mobile concepts start near $10,000, while full-service restaurants, childcare centers, and hotels run past $1 million. Item 7 of a brand's Franchise Disclosure Document is the only figure that binds it, covering the fee, build-out, equipment, inventory, training, and opening working capital.
How much does it cost to open or start a franchise?
Opening a franchise costs far more than the franchise fee. The all-in initial investment covers the fee, real estate and build-out, equipment, inventory, and six to twelve months of working capital, and runs roughly $50,000 to $500,000 for most brands. Subway publishes $199,135 to $536,745 and Dunkin' publishes $443,000 to $1,832,500 for a freestanding restaurant. "Cost to open" and "cost to start" mean the same thing: budget for the Item 7 total, not the headline fee.
What do you pay at each stage of buying a franchise?
Money leaves in a sequence, not all at once. Attorney and accountant review of the FDD runs $2,000 to $5,000 before you commit to anything, and Discovery Day travel is on you. A deposit of roughly $5,000 to $25,000 often follows the application and is credited against the fee. The full franchise fee comes due at signing, then lease deposits, then build-out and equipment, then training travel, then six to twelve months of working capital at opening.
How much do you need to finance a franchise, and what does an SBA loan require?
Lenders want real skin in the game, but rarely the whole investment. An SBA 7(a) loan requires a minimum 10% equity injection under SOP 50 10 8, while conventional bank lenders typically look for 20% to 30% down. SOP 50 10 8.1 takes effect on October 1, 2026, so confirm the requirement with a lender for any loan numbered on or after that date. The combined 7(a) and 504 ceiling doubled to $10 million on July 4, 2026, and lenders generally confirm a brand appears in the SBA Franchise Directory before approving a 7(a) loan.
What is the difference between GrowthFactor and Buxton for franchise site selection?
Buxton's 30-year consultative model pairs deep psychographic methodology with analyst-mediated engagements that often run weeks to months. GrowthFactor delivers similar analytical rigor as a self-service platform: setup in a day, transparent scoring across configurable lenses your team can inspect, and an integrated deal pipeline. Cavender's tripled its opening pace with GrowthFactor, going from 9 new stores in 2024 to 27 in 2025, with every new location performing at or better than expected.
Budget for the Site, Not Just the Brand
Every brand presents the franchise fee first, even though it is the smallest budget item. Whether the investment works is determined by the one-time build-out, the royalty paid forever, and the trade area behind a ten-year lease. Only the last of these can a buyer control, and it is the factor most buyers choose with the least evidence.
GrowthFactor scores sites on the factors that affect unit performance, including foot traffic, demographics, competitor proximity and drive-time. It explains the basis for each score, so the location decision withstands the question "where did this number come from?"
When the brand decision is still open, begin with franchise opportunities. Once you have a brand and are choosing the site, see how we help emerging multi-unit retailers defend the decision before the lease is signed.