By Lee Eugene
Buying a franchise is a booming business for amateurs and experienced both. Yet, there is a need to evaluate a franchise and its cost before jumping into the contract. Plumbing and drainage franchises are surfacing to be a promising investment due to rising business turnovers. A prime concern for franchise buying is the cost. Just like any other franchise business, Plumbing + drain franchise cost is not that straightforward. It takes a lot more factors into account.
Factors that account for the evaluation of a franchise cost
It is expected to be curious about franchise expenses and why some brands are more expensive to launch than others. Costs vary widely in the industry, making it difficult to determine whether the preferred franchise’s investment cost is acceptable or outrageous. Here are a few factors that impact franchise prices.
Franchise Fee
On joining a franchise, the franchisee must pay a charge known as the ‘franchisee fee.’ This one-time payment can cover a wide range of expenses, such as-
- Training
- Support from the corporate headquarters
- A start-up bundle
- Assist in seeking an appropriate site for the office
- Equipment and uniforms
- Marketing
- Access to operating and point-of-sale (POS) systems
There are significant variations in the franchise fee in the plumbing industry. Nevertheless, there might be times when the price demanding by the franchise raises some red flags. Consider the following points to resolve the red flags and obtain a clearer view of the reasonable costs.
- Is it competitive with other businesses in the field?
- Is there any high-priced equipment or real estate involved?
- Is there a breakdown of what the franchise fee covers from the franchisor?
If not sure what to pay for, it is better to ask for clarification.
Royalty fee
The royalty fee, often known as a “service charge” or “management fee,” is paid to cover the franchisor’s ongoing assistance costs. It varies widely across the franchising industry, and some franchisors may not charge a management fee at all, making it difficult to provide an accurate average.
A plumbing + drain franchise cost might add a monthly royalty fee that is fixed, while some may use a percentage model that fluctuates with their turnover. Low royalty payments should not be considered a beneficial thing for a franchisee. If the franchisor doesn’t have a steady revenue stream, they may be unable to invest in and improve the franchise network. Consequently, it may come across as a lack of support and creativity in the company, leaving them frustrated and stagnating.
Marketing fee
Although not all franchisees charge a marketing fee, some handle most marketing and advertising from a single location. They might anticipate paying an extra one to five percent of their turnover or a predetermined charge every month.
Intangible assets
The value of intangible assets is one of the most critical aspects of a franchise’s financials. For example, brand recognition can elevate a mundane franchise opportunity to a highly sought-after one.
Conclusions
Plumbing + drain franchise cost should be closely scrutinized and evaluated for a concise picture of how much it would cost eventually.
