Most franchises cost $50,000 to $200,000 in total initial investment, with a one-time franchise fee of $20,000 to $50,000 inside that figure. Home-based concepts start near $10,000, while full-service restaurants, childcare centers, and hotels run past $1 million. Item 7 of the FDD holds the real number for any specific brand.
How Much Does It Cost to Buy a Franchise?
The cost varies dramatically by industry and brand. Here is the shape of it before the detail.
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 depending on brand and format
- 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
Understanding these costs isn't just about having enough money to start. It's about avoiding a million-dollar mistake on a site that was never going to work.
I'm Clyde Christian Anderson, founder of GrowthFactor.ai, and I started evaluating retail real estate at age 15 in my family's business, where I first saw how much the average cost to buy a franchise depends on the location you sign for. After working in investment banking at Wells Fargo and BDT & MSD, I built GrowthFactor to help retailers and franchises make better site selection decisions.
The numbers above tell only part of the story. What you actually pay depends on your industry, your market, your financing structure, and a sequence of expenses that catches most first-time franchisees off guard.
What You Pay at Each Stage of Buying a Franchise
Money leaves your account in a sequence, not in one lump. Most cost guides publish a single total investment range and stop there, which tells you nothing about when you need the cash or what you can still walk away from. Here is the order it actually happens in.
1. Discovery and FDD review: $2,000 to $5,000, plus travel. The franchisor gives you the Franchise Disclosure Document for free and by law must deliver it at least 14 days before you sign anything. Your cost at this stage is professional review: a franchise attorney and an accountant reading 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, and that travel is on you. This is the cheapest stage to quit, and the most expensive one to rush. The FTC's $17 million settlement with Xponential Fitness in March 2026, over misrepresented opening timelines and FDD delivery violations, is a live reminder of what a skipped review costs.
2. Application and deposit: often $5,000 to $25,000. Many brands take a deposit once your application is accepted, credited against the franchise fee when you sign. Read the refund terms carefully. Some are fully refundable, some are not refundable at all.
3. Signing: the full franchise fee comes due. Subway's is $15,000, Dunkin's is $40,000, McDonald's is $45,000. This is the entry ticket, and it is usually the smallest line in your budget.
4. Site selection and lease: 3 to 6 months of rent up front. Security deposit, first and last month, and often several more months in prepaid rent, plus legal fees on the lease itself. This is where two franchisees of the same brand start to diverge, because rent is set by the market you chose, not by the franchisor.
5. Build-out and equipment: the largest single expense. For any brick-and-mortar concept this dwarfs the franchise fee, and it is the line most exposed to the construction market. Franchisors publish a range because they cannot know your landlord's shell condition, your local labor rates, or what permitting costs in your municipality.
6. Training and pre-opening: $5,000 to $25,000 beyond the fee. The franchise fee typically covers the training program itself. Travel, lodging, and wages for the staff you're paying to sit in class usually are not covered.
7. Opening: six to twelve months of working capital. Payroll, rent, inventory, and utilities before the unit turns cash-flow positive. This is the line first-time owners underfund most often, and the one that closes units that were otherwise viable.
How Much Does It Cost to Open or Start a Franchise?
Opening a franchise costs far more than the franchise fee alone. Once you add real estate, build-out, equipment, inventory, and working capital, the all-in cost to open most franchises lands between $50,000 and $500,000, and full-service restaurants or childcare centers often run past $1 million.
People search "cost to open a franchise" and "cost to start a franchise" interchangeably, and the honest answer is the same for both: budget for the total initial investment in Item 7 of the FDD, not the headline fee.
Because build-out and rent swing so widely by market, the same brand can cost close to twice as much to open in a dense metro as in a secondary market. That site-by-site variance is why modeling the location economics before you sign matters as much as picking the brand, and it is why careful franchise site selection and a clear financing plan belong at the top of your checklist.
Average Franchise Cost by Industry
Franchises are available at nearly every price point. Home-based and mobile operations can start for $10,000 to $15,000, while a McDonald's traditional restaurant requires roughly $1.5 million to $2.7 million. The majority land in the $50,000 to $150,000 range.
The franchise sector is projected to add roughly 12,000 net new establishments in 2026, reaching about 845,000 units and $921 billion in economic output, with employment near 8.9 million, per the IFA and FRANdata 2026 Franchising Economic Outlook. That growth creates real opportunity, and it also means more 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 - $1,900,000 | Ace Hardware ($579,000-$1,913,000), 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 ($434,823-$1,030,500) |
| 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 reflect each company's current published FDD Item 7 disclosures; ranges shift with store format and market.
Food Service: QSR Versus Full-Service
Quick-service restaurants and full-service restaurants sit at distinct investment tiers, and "lower cost" is relative. Subway publishes a $15,000 franchise fee and a total initial investment of $199,135 to $536,745, with minimum financial requirements of $150,000 net worth and $100,000 liquid assets per location. Dunkin' publishes a $40,000 fee and $443,000 to $1,832,500 total for a freestanding restaurant, and asks for $250,000 in liquid assets and $500,000 net worth.
Full-service concepts command a significantly higher investment: more extensive build-out, specialized kitchen equipment, larger dining rooms, more permits. For a McDonald's traditional restaurant the initial franchise fee is $45,000, but total investment runs $1,471,000 to $2,728,000. One number worth correcting if you're working from an older guide: McDonald's raised its royalty from 4% to 5% for new franchisees effective January 1, 2024, its first increase in roughly 30 years. If you are buying today, 5% is your number.
FSRs demand a heftier outlay and can return more top-line revenue per unit. The tradeoff shows up in restaurant franchise growth strategy, where slower unit rollout buys higher per-unit volume.
Retail and Service Franchises
Home-based and mobile operations carry the lowest overhead. RE/MAX runs a $17,500 to $37,500 initial franchise fee with total investment between $45,000 and $245,500, per its FDD filing, because there's no kitchen to build and no inventory to stock. The same is true for home inspection and consulting concepts.
Retail franchises with physical locations escalate quickly, since inventory, store build-out, and fixtures all land at once. A retail franchise might need $25,000 to $125,000 for initial inventory alone. Ace Hardware estimates $579,000 to $1,913,000 for a new leased store, and it is worth a closer look on fee structure: Ace runs as a cooperative with no traditional royalty, returning year-end profit distributions to member-owners instead. Over a ten-year hold that changes the math considerably against a percentage-of-sales royalty.
Service franchises like Orangetheory Fitness ($822,292 to $1.4 million) and Massage Envy ($434,823 to $1,030,500) sit in between, carrying specialized equipment and dedicated build-out. Whether you're weighing real estate franchises or a retail storefront, the "average" is a blend you should never budget against directly.
Ongoing Costs: Royalties, Marketing, and Technology
Royalties are the largest ongoing cost of franchise ownership, and they compound in a way the upfront investment does not. They run 4% to 12% of gross sales across the industry, and the marketing-fund contribution usually sits on top rather than inside. Published rates from three of the most searched brands show how wide the spread gets:
| Brand | Royalty | Advertising Fund | Combined |
|---|---|---|---|
| McDonald's (new franchisees) | 5% | ~4% | ~9% |
| Dunkin' | 5.9% | 5% | 10.9% |
| Subway | 8% | 4.5% | 12.5% |
A unit generating $1 million a year at Subway's combined 12.5% sends $125,000 to the franchisor before rent, payroll, or food cost. The same unit under Dunkin's structure sends $109,000. That gap is larger than most franchise fees, and it repeats every year you operate.
Beyond royalties, budget for technology fees. Point-of-sale systems, the franchisor's management software, online ordering, and loyalty platforms commonly run a few hundred dollars per unit per month, though these are industry estimates rather than a published standard, and Item 6 of the FDD is where you'll find the binding figure for your brand. Tracking what those systems actually return is the job of franchise analytics.
Financial Qualifications and Payback Expectations
Franchisors screen for financial staying power, not just the ability to write the opening check.
Liquid capital and net worth. Franchisors typically require $30,000 to $100,000 or more in liquid assets, scaling with the concept: Subway asks $100,000 liquid and $150,000 net worth, Dunkin' asks $250,000 and $500,000, and Kiddie Academy asks $250,000 liquid and $750,000 net worth for its leasing scenario. These thresholds exist because undercapitalized units fail at the ramp, not at the opening.
Financing. An SBA 7(a) loan requires a minimum 10% equity injection for a start-up business under SBA SOP 50 10 8, effective June 1, 2025, while conventional bank lenders typically want 20% to 30% down. The SBA reinstated its Franchise Directory on June 1, 2025, and lenders generally confirm a brand is listed before approving a 7(a) loan. Rates matter more in 2026 than they did when many of these guides were written: the SBA's optional peg rate rose to 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 difference is real money every month. Our guide to financing a franchise walks through 7(a) loans, conventional debt, franchisor financing, and 401(k) business financing (ROBS).
Payback. Two to three years to profitability is the figure repeated across the franchise press, and it is worth knowing that it is a rule of thumb rather than a finding from any rigorous study. No SBA or IFA research establishes it. The honest version: payback depends on your brand's unit economics and your site, and Item 19 of the FDD is the only brand-specific evidence you'll get before signing. Where Item 19 is thin or absent, existing franchisees are your data source.
The Costs Most Buyers Underestimate
Three lines routinely come in over budget.
Legal review. A franchise attorney reading your FDD costs $2,000 to $5,000, more for a complex or multi-unit deal. Skipping it to save the fee is the single worst trade in this process. Our guides to FDD disclosure and obtaining a free Franchise Disclosure Document cover what to read first.
Build-out overruns. The franchisor's Item 7 range is built from system averages, not from your landlord's shell condition, your municipality's permitting queue, or today's materials pricing. That last one moved 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%. Many FDDs still carry ranges built before that shift. On a $400,000 build-out, three points is $12,000 you did not budget. Ask franchisees who opened in your region this year what they actually spent, not what the FDD projected.
The second location. Most multi-unit operators discover that unit two costs more attention than unit one, because the site that made unit one work was often luck rather than method. This is the pattern we see most across our customers: the first store was a neighborhood the founder knew personally, and there is no second neighborhood like it. Building a repeatable read on a trade area, before the lease rather than after, is what turns one good store into a portfolio. Cavender's tripled its opening pace this way, going 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, while conventional bank lenders typically look for 20% to 30% down. The SBA reinstated its Franchise Directory on June 1, 2025, and lenders generally confirm a brand is listed before approving a 7(a) loan. Rates moved in 2026: the SBA's optional peg rate rose to 4.75% for the third quarter, so shop the structure as carefully as the brand.
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
The franchise fee is the number every brand leads with and the smallest one in your budget. What determines whether the investment works is the build-out you pay for once, the royalty you pay forever, and the trade area you signed a ten-year lease in.
That last one is the only variable you fully control, and it's the one most buyers decide with the least evidence. GrowthFactor scores sites on the inputs that move unit performance — foot traffic, demographics, competitor proximity, drive-time — and shows the reasoning behind every score, so a location decision survives the question "where did this number come from?"
If you're still choosing a brand, start with franchise opportunities. If you already have one and you're picking the site, see how we help emerging multi-unit retailers defend the decision before the lease gets signed.