Franchise Startup Costs Explained: How Much Does a Franchise Cost?

Although there’s no way to completely eliminate the financial risks inherent in opening a business, franchising offers entrepreneurs a safer path to business ownership. As you start thinking about your franchise opportunities, you’ll want to pay close attention to what it costs to open and operate your new business. 

One of the many benefits of franchising is that the initial franchise fee, startup costs, and ongoing franchise fees are all provided to you in the brand’s franchise disclosure document, or FDD. If you’re working with a trustworthy franchisor, like Kitchen Tune-Up, they’ll be even more transparent about what you can expect.

That said, first-time franchisees often have a difficult time understanding what their financial obligations are. If you’re wondering how much does a franchise cost, we’re here to help. Let’s take a closer look at the FDD, as well as some of the most important parts of your franchise startup costs.

Breaking Down Franchise Startup Costs

While every part of the FDD is important, you should pay close attention to Item 7, where you’ll find franchise startup costs explained. Usually in the form of a chart, this item covers all the costs that go into getting your franchise ready to open. Your actual investment will depend on several factors, like equipment, materials, and the part of the country in which you’re operating. Franchisors may also provide figures for living expenses during training and working capital during your first year in business. In most cases, the FDD will provide a low-to-high range of what your startup costs could be instead of a single figure.

At Kitchen Tune-Up, our franchise investment cost for 2025 is:

• $79,950 initial franchise fee
• $49,980 minimum working capital
• $129,930 to $188,850 investment range
• $81,930 minimum total cash required

Kitchen Tune-Up offers up to $48,000 of in-house financing for qualified franchisees and allows third-party financing, which we’ll discuss later.

What Does My Initial Fee Cover? 

The initial franchise fee is a one-time charge, usually due when you sign your franchise agreement. It’s not a royalty; instead, it pays for training, operational support, and marketing assistance. 

Ongoing Franchise Fees

Right before the initial franchise fee breakdown, you’ll find your ongoing franchise fees in Item 6. Similar to Item 7, Item 6 uses a chart to lay out each fee and how often you’ll pay them. Fees vary by franchisor, but there are two you can almost always expect:

• Royalties let you use the franchisor’s brand, proprietary knowledge, and trade secrets. This fee helps your franchisee grow the system and keep the brand competitive. You can usually expect it to be 4-10% of your gross sales for the reporting period.
• Advertising fees support your franchisor’s marketing efforts. Most franchisors provide some level of marketing support, like custom marketing strategies and toolkits. You can usually expect it to be 1-7% of your gross sales for the reporting period. Some franchises break the fee down into national advertising and local advertising.

Hidden Franchise Fees

While franchisors do their best to be transparent, there are some costs that we can’t fully account for. During the startup process and throughout the life of your franchise, you’ll be responsible for things like unforeseen repairs, as well as permit fees, taxes, insurance, and utility bills that will vary in cost. Knowing the other startup costs and ongoing fees up front should help you in budgeting more efficiently and creating a buffer when the unexpected happens.

Other Costs to Budget For

In addition to startup costs and recurring fees, you’ll also need to budget for the costs associated with operating a business, including payroll, accounting and legal services, equipment and software upgrades, and general upkeep. There might be costs associated with your regulatory obligations; for instance, permit renewal and zoning. You may also want to create a fund for marketing, continuing education, travel, and coaching. 

When Will I Break Even?

It’s not possible to predict exactly when you’ll break even. ROI takes time and depends on a number of factors, particularly the rate at which you’re able to build your customer base. Beyond that, slower growth and greater upfront expenses are likely to impact profits during your first year in business. Kitchen Tune-Up franchisees benefit from one-on-one business coaching that helps them set measurable goals and create better opportunities to achieve ROI faster.

Understanding Your Financing Options

If you’re not working with a franchisor that offers in-house financing, or if their in-house financing options aren’t adequate for your needs, you also have access to third-party financing. Your franchisor is likely to have a list of trusted lenders, and they’ll be happy to help you identify the right one. Depending on your needs and financial situations, the best financing option for you could be a Small Business Administration (SBA) franchise loan, a home equity loan, or borrowing against your 401k.

Kitchen Tune-Up: An Affordable Franchise Opportunity

Kitchen Tune-Up is an accessible opportunity for hardworking entrepreneurs. In fact, we’ve been ranked #11 on Entrepreneur’s 2025 list of Top Low-Cost Franchises Under $150,000. With lower startup costs and a proven business model, you have more opportunities to build a successful business. Thanks to our relationship with Home Franchise Services, a powerful industry leader, we’re able to provide franchisees with the support and resources they need to thrive.

Ready to get started? Inquire now, and one of our franchise advisors will be in touch with more information.