Understanding Initial Franchise Fees

Understanding Initial Franchise Fees

Perhaps you’ve decided that franchising is the right way for you to start your business. Perhaps you’re still trying to determine if franchising offers you advantages over launching a business without the support of a franchise network. In either situation, a key part of your decision-making process should be understanding precisely what you’re paying for. Initial franchise fees and ongoing royalties should pay for different thing, and each should provide you with more value than going it alone. Here, we’ll start with a discussion of initial franchise fees, and next time we’ll look at ongoing royalties. Starting with the initial fees, ask a potential franchisor the following question:

What Do I Get For Paying These Initial Franchise Fees?

All franchise systems have initial fees, but they all vary greatly. Some of this variance is because of the industry. When purchasing a NOVUS Glass franchise, some of the initial fees pay for windshield repair tools. Initial fees for a food and beverage franchise would not include this, but NOVUS initial fees do not include any equipment to make french fries (although our UV curing lamp does put out a lot of energy). Some of this variance can also come from the projected revenues and profits. Some franchisors feel that they should charge you more to join their network if you have the potential for higher revenue in their industry. NOVUS does not take this approach. What all initial franchise fees should have in common, is that they should all (perhaps with the exception of THE franchise fee) pay for something that helps you launch your business. If you’re not sure what these fees pay for, get answers before moving forward.

One exception to fees that pay for something to help you launch your business can be the franchise fee. To be as clear as possible, THE franchise fee is often one of the “initial franchise fees.” Make sense? Some franchisors also call this a territory fee. Some franchisors see this as an access fee—you’re paying a certain amount for the honor of joining their network. Other franchisors, like NOVUS, keep this fee as low as possible and only use it to pay for the franchise sales process (these articles don’t write themselves, you know?). NOVUS’ philosophy is to minimize the initial fees and make them as productive as possible to help you launch your business efficiently. NOVUS makes money when you make money and pay royalties (we’ll talk about that next time).

Even if a franchisor gives titles to the different fees, be sure you understand exactly what that title means. For instance, one of NOVUS’ initial franchise fees is an “Identification Package.” What does that mean? For a new NOVUS franchisee starting an auto glass business, an “Identification Package” means a wrap for a mobile service vehicle and installation, uniforms, business cards, and promotional items. Starting an auto glass franchise with NOVUS also means you’ll pay for a “Software Package.” What software? This covers your first year of monthly subscription fees for your point-of-sale software, and setup and training on the software.

As mentioned above, different franchise systems have different fees depending on their industry. Your first step is to determine what the initial fees are providing for you. Then, determine if the fees will help you launch a more successful business than you could on your own. Lastly, in the industry you’re targeting, decide which franchisor’s fees provide you the most value in launching your business. Note that this is not the same as asking whose fees are the lowest. Some fees may be lower, but not provide any value for you.

NOVUS’ initial franchise fees include: the franchise fee, initial training, windshield repair equipment package, initial marketing package, identification package, and software. To learn exactly what value you receive with each of these fees that will help you launch your business, call 1-800-944-6811 or go to www.novusfranchising.com.

About NOVUS Glass

For over 47 years, NOVUS has remained the industry’s research & development leader in auto glass service. NOVUS has been awarded more U.S. Patents for windshield repair than any other company in the windshield repair industry. For more information on starting a NOVUS business please call 1-800-944-6811 or go to www.novusfranchising.com.