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What Is the Initial Franchise Fee?

When it comes to owning a franchise, one of the first steps you will take is paying the initial franchise fee. This will allow you to open a location and provide you with certain rights as an owner.

For aspiring entrepreneurs who have never owned a franchise before, there is much to learn. At Winmark®, we provide all the resources necessary to make an informed decision and help make your investment a profitable one.

What Kind of Capital Do I Need to Break Into the World of Franchising?

First thing’s first – all franchises require that their franchisees have a certain amount of capital to purchase a franchise location. This consists of everything from cash to non-retirement stocks and bonds and overall net worth.

Over the years, our team has learned plenty about what it takes to run a successful franchise location. Appropriate capitalization is essential because it plays a significant role in a business’s success.

At Winmark, we require our franchisees to have a specific amount in cash or liquid assets and an overall net worth of at least $400,000.

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What Is the Purpose of An Initial Franchise Fee?

The initial franchise fee is a one-time fee that will allow you to officially join a franchise system. It gives you the legal right to own and operate a franchise location and provides you with access to licensing, branding, trademarks and intellectual property.

In other words, it provides you with the basic assets you need to build your business around a recognizable brand. Investing in a franchise is one way to help increase profitability, as brand awareness is critical to getting customers through your doors.

Depending on the franchise, the initial fee may be a lump-sum payment or a series of installments.

What Does An Initial Franchise Fee Cover?

So you may be wondering, how will your initial fee contribute to your business’s success? For some franchises, this fee covers many of the startup costs associated with opening your location. Other costs that go into this process are centered around training, site selection and overall support.

In addition to the franchise fee, you may have other buildout and startup costs to consider, such as buildout, inventory, signage and obtaining licenses or certifications.

For over 30 years, we have been committed to the success of our franchisees. We offer 360-degree support that has allowed many of our owners to open multiple stores. Some even own several different Winmark brands, which includes Play It Again Sports®, Plato’s Closet®, Once Upon A Child®, Music Go Round® and Style Encore®.

Where Can I Learn More About the Costs of Owning A Franchise?

Upon researching a franchise, you will have the option to review a Franchise Disclosure Document or FDD. The FDD lists all the essential information you need to know before investing in a franchise, including the specific fees, your potential earnings, all the different processes, the terms of your agreement and general expectations for the franchisee and the franchisor.

Looking to join our thriving network of resale franchisees? Click here to learn more about our franchise opportunities and receive your free franchise report!

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