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Analysts estimate that franchises represent only about 8% of the total service and retail business outlets in the United States.  Yet, they capture close to 50% of the total dollars spent in those markets. 

Cost Factors

Aspiring entrepreneurs sometimes believe franchises “cost too much.”  They view the initial franchise fees and ongoing royalties as excessive and feel they are windfalls for the franchisors. In reality, the costs of joining franchise systems can represent very good deals for franchisees.

There are two basic costs of going into franchising:  (1) the initial franchise fees and expenses of starting the business, and (2) ongoing fees and royalties.  Consider why they can represent good values.

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