What is a Franchise Fee? Your Questions Answered
Understanding Franchise Fees & How CoolVu Can Help You Pay for Them
The global economy is in the midst of a franchise boom; according to the International Franchise Association, franchise GDP is increasing at a pace of 4.3% in 2024, up to $545.8 billion. As entrepreneurs flock to franchises, they have to consider diverse financial concerns associated with buying a business — franchise fees being chief among them.
Got questions? We’ve got answers. Learn about what you’re actually paying for with a franchise fee, other key facets of these fees, and how CoolVu can help you pay for them if you choose to franchise with us.
- What is a Franchise Fee?
- What is a Royalty Fee in Franchises?
- How Much is the Average Initial Franchise Fee?
- How CoolVu Streamlines Franchise Fees for Diverse Applicants
What is a Franchise Fee?
The Franchise Fee refers to the initial, immediate, one-time payment due to franchisors that allow franchisees to operate a business under the franchise brand for a predetermined amount of time. Think of a franchise fee as a license to use a brand; like any license, it eventually needs to be renewed, but the fee pays for an extended period of use. Let’s answer some other frequently asked questions about franchises to flesh out this definition.
Are Franchise Fees Negotiable?
Typically, franchise fees are not negotiable — but there may be publicized options for discounts. Most brands refuse to negotiate franchise fees to maintain a streamlined franchise purchase process and ensure no one franchisee gets an unfair deal compared to another. Many franchisors, however, offer unique franchise opportunities that offer fixed discounts to specific types of applicants.
Are Franchise Fees Tax Deductible?
Franchise fees are tax deductible, but not immediately after payment. Generally, franchisee fees are considered deductible business expenses by the IRS, but only as Section 197 intangibles — regardless of whether or not costs were incurred as part of an acquisition. In turn, as with all Section 197 intangibles, franchise fees are tax deductible over a fifteen year period.
Are Franchise Fees Annual?
No; typically, franchise fees only refer to the initial fee paid to franchisors at time of purchase, making them a one-time charge. Some franchisors may refer to additional fees under the “franchise fee” label. However, for the most part, the annual fees charged by franchisors are limited to royalty fees.
What is a Royalty Fee in Franchises?
Royalty fees are recurring fees paid to franchisors based on a set percentage of a franchise location’s revenue or a flat fee based on tenure. Unlike franchise fees, royalty fees can fluctuate; due to being linked to a sliding scale of a percentage or flat fee, royalty fees may change month to month or year to year. That being said, franchisees can still budget accordingly to pay royalty fees.
How Much is the Average Initial Franchise Fee?
Average initial franchise fees are around $50,000-$60,000, with fees typically ranging from as low as $10,000 to as high as $100,000. ADP estimates that total franchise startup costs can range anywhere from $10,000 to $5 million; initial franchise fees can make up a significant chunk of this total, with total startup costs also including professional fees, equipment purchases, property investments, and more. With such hefty costs associated with opening a franchise, potential franchisees should look for a franchisor with flexible and digestible payment options.
How CoolVu Streamlines Franchise Fees for Diverse Applicants
As one of the top window treatment franchises, CoolVu offers accessible investment options for all applicants — including in-house financing and extensive discounts for specific demographics. Discover how you can finance your franchise fees with CoolVu without the consternation associated with other franchisors.
Options for In-House Financing
Not all franchisees can pay the Initial Franchise Fee upfront; CoolVu offers in-house financing on our initial franchise fee to all qualifying franchisees. In turn, franchisees can make a plan for discharging our initial fee long-term, using income from their franchise to ultimately pay off the loan. If you do decide to finance in-house with CoolVu, the only difference in charge is an additional $350 fee over 72 months. CoolVu franchisees can also look into SBA franchise financing and 401(k) franchise financing for funding — leading to diverse ways to pay off our fee and flexibility for franchisees with different needs.
Painless Upfront Payments
Already have the money for our franchise fee? You’re in for a discount. When paid in full upfront, CoolVu offers a 25% reduction in price for the Initial Franchise Fee — lowering the price from $19,900 to $14,925. This discount incentivizes franchisees with the necessary funding to pay our fee immediately, focusing on other charges and expenses when developing the rest of their business going forward.
Waived Fees & Discounts for Underrepresented Groups
While financing is flexible for any applicant, CoolVu offers even greater discounts for specific applicants — with some getting their fees waived entirely. After providing a copy of the applicable DD form 214, qualifying honorably discharged military veterans & their spouses pay $0 on CoolVu’s Initial Franchise Fee. In turn, veterans can start their business with additional funding for other parts of their franchise.
Other groups receive significant discounts on the Initial Franchise Fee. Current & former first responders (including firefighters, police officers, military reservists, and EMTs), women, and minority franchise applicants receive a 50% discount on the Initial Franchise Fee, lowering the price to $9,950. The 25% reduction in price for upfront payments also applies to this discounted price — meaning women, minorities, and first responders who pay upfront only pay $7,463.
Let’s Talk About Financing Your CoolVu Initial Franchise Fee
With pliable methods of financing and a responsive team to support you every step of payment, CoolVu makes our Initial Franchise Fees seamless. This is just one benefit of franchising with our expert team within the booming window film industry. Together, let’s find out the best way to finance your CoolVu franchise; contact us today.
