Fast forward a couple of years and today we have a growing number of stores in Queensland, and you would think, a great successful business model to buy a franchise in.

However if you are looking at purchasing a donut franchise, you may want to think again.

No Krispy Kreme Franchises In Australia

is privately owned in Austra and New Zealand, with all stores being run by the company. There are currently no Krispy Kreme franchises and the Australia company has no plans to consider it.

is a major franchise from the United States of America and is know to have franchise costs in the same league as the franchise giants, McDonalds.

I guess that means for now, we can only enjoy the flavours of their doughnuts, without a slice of the profits. And if you are looking for a donut franchise then consider Donut King.

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Franchise Costs Explained

There are five separate costs that you will need to consider when looking into the purchase of a franchise. Here is a list of these costs with a short description to help you gain a better overview of franchise costs.

1. Initial Franchise Fee

   Every franchise has it’s own initial franchise fee.Ranging from about $10,000 (for home based and internet franchises) up to over $1 million ( franchise, franchise and other famous fast food franchises), this initial franchise cost covers support, initial training and management, very much similar to the purchase price of an existing business. But there is no need to get to worried about having the full initial franchise fee upfront as many different payment options are usually made available to potential franchisees.

2. Setup/Build Costs

   Not the initial franchise costs are only for the setup of the business systems that make the franchise unique. They do not include the capital required to set up a shop front and purchase the required office machines. You will need to budget this into your franchise costs analysis.

3. Legal Fees

   Franchises have lengthy procedure manuals and contracts, much to complex for the average person. To complete the purchase of your desired franchise you will need to employ the services of a qualified solicitor that has experience with franchise contracts.

4. Ongoing Royalty Fees

   This is the fee that most people seem to forget. When you purchase a franchise, you are really purchasing a license to use a companies brand and systems. This requires the payment of a recurring fee to be added to your franchise cost list, being made payable to the franchiser for the continual use of their systems.

5. Running Capital

   The most forgotten franchise cost when people do their analysis is running capital. While you do not have to pay this out to anyone all at once, having a cash reserve is important as it provides cash flow as your business is still getting off the ground. This figure will be determined based on your own personal needs.

In purchasing a franchise, you are buying a proven business model and you will pay a premium. However, this does not mean that you shouldn’t purchase a franchise. Now that you know the franchise costs, you are well equipped to complete the required analysis on any franchises that you are interested in.

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