A lot of us are slowly shifting to the idea of owning a business. Of course, everyone does not wish to be employees forever, right? Some of us want to be the own boss, some actually want to spend more time on some things than in an office, etc. Since this is the case, a lot of Filipinos think of something to put up. If you’ve been born in a well-off family, franchising might be one of the options you’ve thought of. Franchises are kind of a stable way to put it but they’re expensive. Along with that, it’s not just the franchise fee you’ll be thinking of. To help you avoid your idea of having “hidden fees,” we will also be discussing what other payments you will make if you buy out a franchise.

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Franchising/Franchise Fee

When a person is looking to be part of the franchise or to own one, this franchise fee typically is like the initial payment. However, the franchise fee is like buying the name or part of that specific brand/franchises. This price is associated to regain the initial cost outlays that systemizes the whole franchise. To set the expectation and if you’ve done enough research, paying for the franchise fee takes years for the Return of Investment (RoI).

Royalty Fee

The royalty fee however is not a one-time charge as it is the fee for gaining profit by using the name of the brand or the business. Some brands or franchising companies require payment each month for the royalty fee and usually, the amount they need to receive is around 5 – 7 percent of the total sales each month (if it’s per month). Although you would think that this is just a small fee, there are companies that have different methods or requirements in paying the royalty fee. Some have flat rates per month or per quarter; some have flat rates + a total percentage of the sales. This is as well dependent that the name is being properly used to effectively drive sales to their maximum.

Marketing Fee

Other than the royalty fee, there is also the marketing fee. The marketing fee is a fee imposed by the franchiser to franchisees for conducting the marketing and for spreading the brand name. The reason why is because it actually is the franchising manager’s job to conduct effective marketing to ensure that all franchises are to get revenues to meet or to even exceed the target. The fee ranges from 2 – 5 percent depending on the agreements you have with the franchising company.

License Fee

If you’ll think about it, what difference does the license fee have with the franchise fee? Although they’re almost technically the same, the license fee is the fee being required for the use of products and materials from the main franchiser and the technology used. Usually, the payment for the license fee is often flat rate and is taken out annually. A good concrete example is the Subway franchise; the franchisee must purchase all materials, ingredients, and condiments from Subway and thus, the essence of the license fee. Although there are some brands or franchises that inculcate the license fee to the royalty fee, there are franchises that separate this so don’t get shocked.

Now that you know all fees associated in purchasing a franchise, you are now ready for it. But wait, what are the prices of the most famous food franchises that originated here in the Philippines?

Read: Top Businesses For OFWs To Have In The Philippines

**ALL INFORMATION WAS TAKEN FROM THIS FACEBOOK POST.

Jollibee

  • Franchise Fee: N/A
  • Royalty: N/A
  • Marketing: N/A
  • Total initial capital investment: Other information are N/A but aspiring franchisees are being required to prepare Php25 million to Php35 million in Philippine outlets. $450, 000 – $800, 000 for international.

Greenwich

  • Franchise Fee: Php815, 000
  • Royalty: 5%
  • Marketing: 5%
  • Total initial capital investment: Php20 million to Php25 million

Chowking

  • Franchise Fee: Php1 million + VAT
  • Royalty: 6%
  • Marketing: 4%
  • Total initial capital investment: Php13 million to Php15 million

Master Siomai

  • Franchise Fee: N/A
  • Royalty: N/A
  • Marketing: N/A
  • Total initial capital investment: Other information are unknown but to own a franchise, you must prepare a total of Php280, 000.

Red Ribbon

  • Franchise Fee: Php600, 000
  • Royalty: 7% of gross sales
  • Marketing: 3% of gross sales
  • Total initial capital investment: Php6 million to Php7 million

The Generics Pharmacy

  • Franchise Fee: Php290, 000
  • Royalty: N/A
  • Marketing: N/A
  • Total initial capital investment: Royalty and marketing, gathering a total of 10% but initial investment would require Php13 million to Php15 million

Potato Corner

  • Franchise Fee: N/A
  • Royalty: N/A
  • Marketing: N.A
  • Total initial capital investment: Specific fees are undetermined but to get a franchise, aspiring franchisees are required to prepare Php200, 000 to Php1.2 million

Teriyaki Boy

  • Franchise Fee: N/A
  • Royalty: 5% net sales (monthly)
  • Marketing: 2.5%
  • Total initial capital investment: Franchis.e fee is undetermined but royalty and marketing fee has an estimate. Thus, it is advised to prepare a sum of Php 9 million to Php10 million for the initial cap investment.

Shakey’s

  • Franchise Fee: Php1.5 million – Php2.2 million
  • Royalty: 7.5% of net sales
  • Marketing: 5.5% of net sales
  • Total initial capital investment: Php18 million

Tokyo Tokyo

  • Franchise Fee: Php1.2 million
  • Royalty: 3% of net sales
  • Marketing: 6% of net sales
  • Total initial capital investment: Php8 million to Php10 million

Angel’s Pizza

  • Franchise Fee: Php300, 000 – Php500, 000 + VAT
  • Royalty: 4.25% of total net sales per month
  • Marketing: 4% of net sales
  • Total initial capital investment: Php300, 000 to Php4 million

Waffle Time

  • Franchise Fee: Php50, 000
  • Royalty: 5%
  • Marketing: N/A
  • Total initial capital investment: Initial investment of Php250, 000.

Yellow Cab

  • Franchise Fee: Php1.25 million
  • Royalty: 6% of sales
  • Marketing: 4% of sales
  • Total initial capital investment: Php9 million to Php14 million

Pancake House

  • Franchise Fee: Php1, 00, 000 + 12% VAT
  • Royalty: Php7 million to Php8.5 million
  • Marketing: N/A
  • Total initial capital investment: N/A

Max’s

  • Franchise Fee: Php2 million
  • Royalty: 5%
  • Marketing: 3.5%
  • Total initial capital investment: Php15 million

These are the most famous franchising of investments in existence today. Although you will see that the prices are different from the Franchise fee to the total initial capital investment, do not be shocked. As we mentioned earlier, the franchise fee is just the fee by owning a part of the whole franchise, it’s just that. There are other fees included and some of which are the marketing, royalty, and licensing fees. Of course, those fees do not carry some other fees which are:

  • Real estate/Rent
  • Utility deposits
  • Insurance
  • Office equipment/supplies
  • Training
  • Signage
  • Furniture
  • Software
  • Initial Inventory
  • Permits to operate/licenses
  • Payroll
  • Operation Funds
  • Leasehold improvements
  • Renovations
  • Dues

Of course, not all of these will apply to all franchises. I discussed these just to give you a clear definition on why the initial investment costs more than it should.

Now, you know what costs are behind in opening up a franchise. Are you willing to take the risk and be the boss of your own company?

Read Also: List of Gasoline Station and LPG Brands That Are Open For Franchise

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