Franchise fees
Fees range from $10,000 to over $100,000 depending on brand recognition and support.
By the numbers
Franchise costs by the numbers
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Starting a franchise can cost anywhere from a few thousand dollars to several million, and the franchise fee is usually the smallest part.
How much does it cost to start a franchise?
The median initial franchise fee is $40,000 against a median total project midpoint of $362,381, so most of the cost sits in build-out, equipment, and working capital.
Published franchise cost statistics
Royalties
Commonly 4 to 8 percent of gross sales, sometimes plus a national marketing fund contribution.
Total project
Median initial fee of $40,000 against a median total project midpoint of $362,381.
Brand extremes
A Subway franchise can start at $233,000, while a Burger King can require up to $4.67 million.
Industry trend
The average initial investment across the industry declined 2.7 percent in 2025, with significant variation underneath.
SBA equity rule
The 2026 SBA rulebook requires 10 percent equity, with a 1.25x debt-service-coverage test on first-time acquisitions from October 1, 2026.
Which franchise categories carry the most lending risk?
Category choice matters. The SBA 7(a) loan-level file (March 31, 2026 release), covering resolved loans approved in fiscal 2010 to 2019. Across franchise-flagged loans the charge-off rate was 9.4 percent, or 3,337 of 35,406 resolved loans.
| Category | Charge-off rate | What it suggests |
|---|---|---|
| Child care | 2.6% | Lowest charge-off rate among the categories reported |
| Home health | 6.9% | Below the all-franchise rate of 9.4% |
| Franchised restaurants | 11.4% | Above the all-franchise rate |
| Fitness | 11.6% | Above the all-franchise rate |
| Auto repair | 11.7% | Highest of the categories reported |
Charge-off rates measure loans lenders wrote off, not business closures. Source: Our audit.
What raises or lowers your total investment?
The biggest cost drivers are real estate and build-out, equipment, opening inventory, staffing before revenue arrives, and the working capital you need to reach break-even. Home-based and mobile models avoid most real estate costs, which is why they tend to sit at the lower end of the range. Restaurants and large retail concepts sit at the top.
Before you fall for a brand, run its Item 7 figures through the budget calculator. FranNet consultants can also help match franchise options to the investment range you are comfortable with, at no cost to you.
New here? Start with the full guide on how to choose the right franchise.
Common questions
How much does it cost to start a franchise?
Costs range from modest to millions. GrowthFactor notes a Subway franchise can start at $233,000 while a Burger King can require up to $4.67 million. MMCG reports a median initial franchise fee of $40,000 against a median total project midpoint of $362,381. Item 7 of each FDD lists the estimated initial investment.
How much is a typical franchise fee?
Franchise Expo USA reports franchise fees from $10,000 to over $100,000, depending on brand recognition and support. MMCG puts the median initial fee at $40,000. The fee is only one part of your cost: build-out, equipment, inventory, working capital, and royalties often add far more, so always read Item 7.
What ongoing fees do franchise owners pay?
Most owners pay a royalty, which Franchise Expo USA says is commonly 4 to 8 percent of gross sales, and often a national marketing fund contribution. Some systems add technology or software fees. Royalties are charged on sales, not profit, so model them against realistic revenue, not best-case figures.
Can I use an SBA loan to buy a franchise?
Yes, SBA 7(a) loans are a common way to finance franchises. MMCG’s review of the SBA 7(a) loan file found a franchise-flagged charge-off rate of 9.4 percent, or 3,337 of 35,406 resolved loans approved in fiscal 2010 to 2019. Lenders will ask for equity, a business plan, and personal financial statements.
Which franchise categories carry more lending risk?
In MMCG’s analysis of SBA 7(a) loans, franchised restaurants charged off at 11.4 percent, fitness at 11.6 percent, and auto repair at 11.7 percent, while home health ran 6.9 percent and child care 2.6 percent. Category is only one factor; owner fit, location, and capitalization matter too.
Do franchises actually make money?
Some do and some do not, and results vary widely by brand, category, location, and owner. Franchise Business Review’s 2026 Most Profitable Franchises list only includes brands where at least 25 percent of surveyed owners report annual income of $150,000 or more. That also means most owners in those systems report less. Read Item 19 and call current owners before relying on any figure.
Ready to talk through your options?
A FranNet consultant can review your goals, skills, investment range, and location with you and present franchise options that fit. The consultation is free to you, and FranNet consultants do not sell franchises.