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The questions and myths around franchising are very present in the heads of entrepreneurs. Would-be entrepreneurs dream of creating a brand with the potential of launching a franchise, while others are interested in becoming franchisees. The question of the costs attached to the franchising concepts are however difficult to answer. Except if you take the time to do some market research and compare a 13 brands as we did below.

 13 brands compared

We decided to compare 13 brands for which we had data :

Criteria used

We compared some basic data such as the duration of the initial contract, the one-time fee to enter the franchise (fixed costs), royalties and participation to advertising expenses, the size of the store, total budget and own contribution, etc …

Results

Results vary greatly from one brand to the other. Not illogically the greatest variation is observed between categories. The food and drink brands in our panel follow more or less the same structure whereas the only brand in a different brand (Tryba) has a different approach (no initial fee required) and a low percentage on material (3%). This is actually due to the fact that a franchisee will have to buy all the material from Tryba and that the brand will sell it with a profit. No need thus to make more money on it; the economies of scale leveraged through additional sales point are also to the advantage of the brand.

As far as the food and drink sector is concerned, we observe also large variations. The initial fee to enter the franchise ranges from 21000€ (Jeff De Bruges) up to 47000€ (Au Bureau, Café Leffe, …) and the royalties from nothing (Jeff De Bruges) up to 6% of the annual revenues (Tutti Frutti, Fournil des Provinces), the average being around 4-5%. Some brands also ask for fees to cover marketing and advertising expenses. Here again they can be as low as … 0% (Cavavin, La Mie Câline) and can go up to 2%.

Conclusion

All in all royalties and miscellaneous fees related to the franchise can account for as much as 10% of your yearly revenues. It’s important to take everything into account and comparing well the different franchising concepts before signing a contract. If you hesitate or don’t know how to handle those aspects, don’t hesitate to contact us.

Detailed comparison of franchising  concepts

Monbana Au bureau Café Leffe Irish Corner
Durée / Duration 7 ans 5 ans 5 ans 5 ans
Droit d’entrée / Fees to enter the franchise 25.000 € 47.000 € 47.000 € 33.000 €
Autres redevances / Others fees (one-time) 20.000 €
redevances d’exploitations (% du CA HT) / royalties (% of revenues) 4% 3% 3% 3%
contribution (% du CA HT) / fees (% of revenues) for communication & marketing 1,50% 1% 1% 1%
apport personnel requis / required own contribution 80000-150000€ >200000€ >200000€ >150000€
implantation / location n°1 périphérie commerciale
taille zone de chalandise / size of the captation zonde à partir de 20000 habitants
surface commerciale / surface of salespoint 120-160m²
montant investissement (hors pas-de-porte) / total budget 200000-350000€ 300000-1300000€ 400000-700000€ 200000-450000€
Tryba Courtepaille La Mie Câline Cavavin
Durée / Duration 3 ans 10 ans 7 ans 7 ans
Droit d’entrée / Fees to enter the franchise aucun 40.000 € 25.000 € 14.500 €
Autres redevances / Others fees (one-time)
redevances d’exploitations (% du CA HT) / royalties (% of revenues) 0 4% 5% 2,50%
contribution (% du CA HT) / fees (% of revenues) for communication & marketing 3% 1,50% 0 0
apport personnel requis / required own contribution 30% minimum >100000€ 35%
implantation / location n° 1 en centre ville (angle de préference)
taille zone de chalandise / size of the captation zonde à partir de 10000 habitants
surface commerciale / surface of salespoint 100m² en centre ville 340-400m² 120-150m²
montant investissement (hors pas-de-porte) / total budget 75000-100000€ 700000€ – 1400000€ 340000€-360000€ 75000€ – 100000€
Histoire de Pains Baila Pizza Tutti Frutti Fournil des Provinces Jeff de Bruges
Durée / Duration 7 ans 7 ans 5 ans 7 ans 7 ans
Droit d’entrée / Fees to enter the franchise 40.000 € 35.000 € 25.000 € 40.000 € 21.000 €
Autres redevances / Others fees (one-time)
redevances d’exploitations (% du CA HT) / royalties (% of revenues) 4% 5% 6% 4-6% 0
contribution (% du CA HT) / fees (% of revenues) for communication & marketing 1% 2% 2% 0,30% 2%
apport personnel requis / required own contribution 30% 30%-40% 75.000 € 120000€ – 140000€ 30%-40%
implantation / location n°1 n°1 en centre-ville ou centre commercial
taille zone de chalandise / size of the captation zonde à partir de 20000 habitants à partir de 50000 habitants à partir de 20000 habitants
surface commerciale / surface of salespoint 80-300m² 200-300m² 80m² 200m² 60m²
montant investissement (hors pas-de-porte) / total budget 350000€ – 500000€ 100000€ – 210000€

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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