What Should I Expect to Pay Up-Front in Business Coaching Franchise Fees?
If you’re considering a business coaching franchise, one important thing to know is how much you should expect to pay in up-front business coaching franchise fees.
Typically, the Franchisor will charge you licensing and training fees up-front. Depending on the circumstances, this can amount to $25,000 to $50,000 for the license, and an additional $10,000 to $25,000 for the training.
Royalty fees begin almost immediately without exception. Royalty fees can be a fixed amount or a percentage amount. Make sure you understand the difference AND the due date. It is normal to see royalty fees in the $1,000 to $1,800 range, paid monthly. Percentage-based royalties are MUCH better. If you see this, it’s usually a good sign that the franchisor actually believes that franchisees can make money using their business model.
There are other costs, too. Most franchisors will charge you a “brand-building fee” which is usually 2% to 5% of revenue. This fee is in addition to your royalty payments and is used (they say) to build the brand locally, in your region. Whether or not you will actually derive any benefit from this is another question entirely and worth asking existing franchisees about.
Depending on the business coaching franchise brand you buy, you might also be required to buy software, a website, and marketing and branding material, including letterhead, stationery, and the like.
So What Exactly Can You Expect in Business Coaching Franchise Fees?
It’s not uncommon for a first-year business coach in a franchise system to spend more than $100,000 to set up their business and then go through another $50,000 to $100,000 in working capital while you’re trying to get cash positive by landing your first few clients. Some franchise opportunities require less and some much more. From my years of experience of selling business coaching franchises for several of the more well-known franchise brands, I’ve seen total start-up costs ranging from a low of $100,000 to as much as $300,000, with median start-up costs averaging about $200,000, including working capital.
Total start-up costs range from a low of $100,000 to as much as $300,000, with median start-up costs averaging about $200,000, including working capital.
For the inside scoop on everything you need to know before buying a business coaching franchise, download our FREE ebook, The Business Coaching Franchise Buyer’s Guide.
