Joining the franchise system is an investment. Since it is investment, it must have a certain amount of capital.

So how much does it cost to invest in a franchise?

How to use these funds?

For example, how much money should be spent on the decoration of shops, how much funds are used to purchase goods, how much funds are used as the cost of joining, how much funds are used for turnover, etc., all of these must be carefully planned in advance, and the franchisees must have a good idea before joining them.

1, the franchisee before joining the business must pay a royalty to headquarters, which is often paid when signing the contract.

This is different from starting a business. If you start your own business, you won't have to pay for it.

So some people think that the shop is not open yet, and the shop owner has not yet made profits, so it will be a great loss to pay such a large sum of money.

But from another point of view, this is a margin that allows the franchisee to avoid risks and help the success of the business. If the selected affiliate headquarters are suitable, it will be worth the money.

Because when the franchisee pays the cost, even if he is a layman and ignorant of business, he can help his company step by step with the help and support of headquarters.

According to different affiliate headquarters, there are different standards for the initial joining fee, which usually account for 5%? 10% of the franchisee's investment. That is to say, if the funds needed to start a franchise are 50? 600 thousand yuan, then the initial franchise fee is between 50 thousand? 6 yuan.

Of course, this is not the same. If the franchisee wants to get a first-class franchise like McDonald's, he often has strong financial resources and pays a high concession fee to headquarters.

2, the subsequent affiliate fee is a fee paid by the franchisee after a certain period of time. Some are paid monthly, and some are paid annually. It includes royalties, that is, royalty; the purchase or sale of headquarters products, such as raw materials, finished products, facilities and equipment, etc.; the fees charged by headquarters for franchisees to provide management services, and advertising expenses.

According to the amount of assistance provided by the headquarters, the management level of headquarters, the reputation of headquarters and the promotion and promotion of headquarters, it is generally not necessary to make achievements according to the performance of the headquarters. It is necessary to know that it is based on the proportion of sales, not the profit of the Lee, whether the profits of the franchisee must be paid, so it is necessary to calculate the cost in the budget and make a good plan in advance.

3, rentals and rentals in a high premium place, the franchisee buy land for their own operation is very unrealistic, so it is necessary to lease other people's local business. In this case, the franchisee must consider the rent before opening the business.

There are usually three ways to lease the shops: first, rent the headquarters, then lease them to the franchisees after the decoration; two, the headquarters and the franchisees go to choose the right shops. After seeing them, the franchisees are assisted directly with the owners. Three, the franchisees go to find the bunk themselves, then rent the house and then negotiate with the headquarters.

The first is to rent the house from the headquarters and then sublet the franchisee to the franchisee. This way is most secure for the franchisees, and has a reputation at headquarters. It has great bargaining power when negotiating the lease, and headquarters can control the pavement. But it also has some shortcomings. For example, some shopping malls are not allowed to sublet or sub lease, which may conflict with the tenant contract; if the franchisee decides not to continue to operate, the responsibility of the rent must be borne by the headquarters before finding new franchisees.

Therefore, many headquarters directly from the franchisee directly to the owners of the rental shop, which is relatively simple and simple, but for the franchisee, there is a lack of protection.

In order to ensure the rental capacity, the owners often require the tenant to pay the rent in advance for half a year or a year in advance, so the franchisee will have to pay the money before opening the business.

The rent level depends on the location of the store.

There will be great discrepancy in the rents of different traffic conditions, surrounding environment and building structures.

The rental level of shops in busy downtown centers and residential or remote suburbs often varies several times or even tens of times.

To save this investment as much as possible, it is critical to choose an appropriate store site.

Of course, it is not that the cheaper the rent is, the better. If the rent is cheap, but the business is cold, what will the profits of the franchisee come from?

On the contrary, even if the rent is expensive in some places, but business is booming, the franchisees will also gain a lot.

In addition to the necessary funds, the franchisee also has to prepare another fund to decorate the shop, purchase equipment, purchase raw materials or goods, and pay for labor, water and electricity charges, telephone charges and other charges, etc., besides the above necessary funds. 4

In terms of interior decoration, if it is a supermarket, a convenience store or a general store, it will only cost tens of thousands of dollars if it is simply decorated.

But if the store, such as decorating shop, western restaurant, high grade clothing store, and other high priced stores, in order to match the style of goods, we must emphasize the style of shops more, and the cost of interior decoration will be more expensive, usually reaching about 100000 yuan.

In terms of equipment, if the stores sell ordinary commodities, most of them will be mainly shelves, boxes, cash registers, telephone and air-conditioning. These items will cost tens of thousands to about 100000 yuan.

If it is a restaurant, it is mainly based on counters, tables and chairs, tableware, cooking equipment, acoustics and air conditioners, so it costs more than ordinary stores.

If you need to purchase special cooking equipment, such as McDonald's, KFC and Kaif ice-cream, the cost will be even greater.

Besides, it also needs to purchase funds and meet the daily costs of labor, water and electricity. No matter what kind of franchised shop is opened, it is essential.

The franchisee should at least prepare more than one month's working capital to cope with the daily operation.

In the early days of business, business may not be guaranteed. There may be very little income in a period of time and less than a year or so. So it seems that a month's working capital is far from enough, and more needs to be prepared.

Therefore, the franchisee must have a certain strength before he can start his business.

In addition, there are two kinds of circumstances related to the preparation of funds: the first is that the people have enough funds to start their own businesses, and some people are unwilling to be indebted. After setting up the goal of starting a business, they will save themselves and save enough money to start their business.

Such a way of opening business entirely relying on its own funds is easier and more prudent in operation because it does not need to repay debts.

But to raise enough funds for opening stores will delay the time of starting a business.

Moreover, because of inflation, prices are rising. Two years ago, maybe 500 thousand yuan was enough to open a shop, and two years later, it may take 800 thousand yuan to open a shop, plus others.

Therefore, the more time the franchisee set up shop, the more capital they need and the more difficult it will be to start business.

The second kind of loan is the loan, which needs to take a certain risk, because it is to raise funds by way of borrowing. After opening a shop, it will allocate part of the turnover to repay the debt every month. Besides the principal, interest should also be added.

But its advantage is that it can reduce the financial pressure at the beginning of the business and achieve the goal of joining the franchise system at an early date. Investors who generally want to join the franchise need to borrow goods from the bank or finance company to lighten the burden.

If you borrow money from a bank, you must fully consider whether you have the ability to repay debts. Otherwise, after opening, you may be liable to pay a heavy debt burden due to the interest payment, resulting in a loss of profit or even loss. Of course, even if there is a solvency, even if there is a loan source, the franchisee can not all hope to borrow money, so we must first prepare a self owned fund.

It is very unrealistic to rely on borrowing to make profits. If a business can make full use of other people's funds to make profits and repay loans, then the business must have a very high income and the manager's tactics are very clever.

This situation can be achieved in the era of what can be sold before, but in the age of fierce competition and serious oversupply of products, it is nothing short of a tale.

If the franchisee neglects the proportion of their loans to loan, the risk of failure will increase greatly in terms of capital turnover.

How much is the amount of own capital?

According to experience, it is best to make up 60% of its own funds. If the borrower accounts for 60% of the funds, there will be difficulties in operation. Unless the market is surprisingly good, the investment will be recovered quickly, otherwise it will easily get into trouble.

Many people only pay attention to raising funds for opening business, while ignoring the working capital needed for future operation, so as to prepare for a rainy day. Many of them fail in their businesses. One of the main reasons is lack of capital turnover, so that they often worry about funds after opening up, and can not concentrate on doing business well.