Cost of opening a franchise business
Posted: Sun Jan 19, 2025 8:11 am
The financial costs of a franchise business include a starting down payment and royalties. The first payment, collected upon signing the franchise agreement, is made immediately, while the second is transferred periodically (monthly, every six months or year). The most popular in Russia have a lump sum payment of up to 500 thousand rubles. For example, in the Dodo Pizza chain, the starting payment is 350 thousand rubles.
It is possible to open a franchise business with lower costs: according to RBC (RosBusinessConsulting, a Russian consulting business), the initial contribution for well-known retail outlets does not exceed 150 thousand rubles.
Cost of opening a franchise business
Royalty can be calculated based doctor data package on a percentage of total revenue or a fixed amount. In the first option, the franchisee pays the owner a certain share of the profit, which is from one to ten percent. In the second scheme, the payment is known in advance and remains constant. It is important to note that the fixed model does not necessarily imply an invariable amount. In some cases, as the franchisee develops, owners can gradually increase the amount of payments. Sometimes the royalty amount is already included in the cost of the goods that the businessman sells.
Through a lump sum payment and royalties, a person running a franchise business obtains a license to use the franchisor's brand, its internal tools and technologies, as well as business and personnel management methods. But the buyer bears full responsibility for registering a legal entity, paying taxes, insurance and pension contributions.
Buying a franchise is only part of the costs of starting a business. The total cost is determined by taking into account various aspects: money for repairs, renting premises, purchasing equipment, hiring and training employees.
Buying a franchise to open a store is possible with a budget of 1.5-3 million rubles, and in the regions - 400-700 thousand rubles. Launching pizzerias and car services will require larger investments - 6-16 million rubles.
The amount of initial investment directly affects the payback period of the business. For example, according to certain estimates, if you invest 10-20 million rubles, the franchise can pay off in less than two years. Note that it is impossible to accurately predict the period based only on the start-up capital: for different networks, the period can differ by 1.5-2 times with the same investment.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
Examples of the largest franchisors
Franchising occupies an important place in the financial structure of Russia. The presence of many branches of large corporations operating under the franchise business model speaks to the veracity of this fact. Let us give examples:
McDonald's
Acquiring a franchise from the American McDonald's chain is usually done by high-income entrepreneurs or experienced businessmen with their own company. Obtaining a license will cost $45,000, but the franchisee must have at least $950,000 to successfully start the company.
Subway
Entrepreneurs running small and medium businesses can buy a business under a franchise of the Subway restaurant chain. Today, there are about 700 establishments operating in Russia. The distinctive feature of the franchisor is the provision of favorable conditions for partners: low initial and subsequent contributions. The initial contribution is $7,500.
Subway Franchise
Burger King
Burger King LLC is engaged in similar activities as McDonald's. Currently, 90% of establishments operate in a franchise format. When purchasing a license, an initial payment of 21 million rubles is required, as well as additional expenses of 2 million rubles. The payback period is two years.
Recommended articles on this topic:
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Lead generation - what is it? Basic methods and how to manage them
It is possible to open a franchise business with lower costs: according to RBC (RosBusinessConsulting, a Russian consulting business), the initial contribution for well-known retail outlets does not exceed 150 thousand rubles.
Cost of opening a franchise business
Royalty can be calculated based doctor data package on a percentage of total revenue or a fixed amount. In the first option, the franchisee pays the owner a certain share of the profit, which is from one to ten percent. In the second scheme, the payment is known in advance and remains constant. It is important to note that the fixed model does not necessarily imply an invariable amount. In some cases, as the franchisee develops, owners can gradually increase the amount of payments. Sometimes the royalty amount is already included in the cost of the goods that the businessman sells.
Through a lump sum payment and royalties, a person running a franchise business obtains a license to use the franchisor's brand, its internal tools and technologies, as well as business and personnel management methods. But the buyer bears full responsibility for registering a legal entity, paying taxes, insurance and pension contributions.
Buying a franchise is only part of the costs of starting a business. The total cost is determined by taking into account various aspects: money for repairs, renting premises, purchasing equipment, hiring and training employees.
Buying a franchise to open a store is possible with a budget of 1.5-3 million rubles, and in the regions - 400-700 thousand rubles. Launching pizzerias and car services will require larger investments - 6-16 million rubles.
The amount of initial investment directly affects the payback period of the business. For example, according to certain estimates, if you invest 10-20 million rubles, the franchise can pay off in less than two years. Note that it is impossible to accurately predict the period based only on the start-up capital: for different networks, the period can differ by 1.5-2 times with the same investment.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
Examples of the largest franchisors
Franchising occupies an important place in the financial structure of Russia. The presence of many branches of large corporations operating under the franchise business model speaks to the veracity of this fact. Let us give examples:
McDonald's
Acquiring a franchise from the American McDonald's chain is usually done by high-income entrepreneurs or experienced businessmen with their own company. Obtaining a license will cost $45,000, but the franchisee must have at least $950,000 to successfully start the company.
Subway
Entrepreneurs running small and medium businesses can buy a business under a franchise of the Subway restaurant chain. Today, there are about 700 establishments operating in Russia. The distinctive feature of the franchisor is the provision of favorable conditions for partners: low initial and subsequent contributions. The initial contribution is $7,500.
Subway Franchise
Burger King
Burger King LLC is engaged in similar activities as McDonald's. Currently, 90% of establishments operate in a franchise format. When purchasing a license, an initial payment of 21 million rubles is required, as well as additional expenses of 2 million rubles. The payback period is two years.
Recommended articles on this topic:
How to Calculate Conversion: 3 Proven Options
32 Ways to Attract Clients: Proven and Unconventional
Lead generation - what is it? Basic methods and how to manage them