[spielmanmj]

Needed some help figuring out what to expect when getting a franchise...

Do most franchisers charge an upfront fee in addition to royalties, is it one or the other or a combination of both? I'm trying to get a feel of what is the most common. Also, if they do charge the lump sum, what is the range that is typical. I realize that this is widely varied with a lot of really popular ones going for millions, but what about smaller, lesser known ones. And if they do a combination of both, what is the typical range or how about if they do just royalties, then what is that range.

I have a franchisor that I'm interested in who will give me a certain vending machine at his cost (about $100k plus another $50k in installation, improvements, etc) but then wants to charge 15% of gross for the life of the machine. I thought it was really high but let me know if this sounds typical. The machine will probably (hopefully) gross anywhere from 50-90,000 per year.

Any help would be great!

Mike

[franchise22]

Yes they charge an upfront fee (franchise fee) and always charge royalties based on your gross sales.

Here is a great article that describes the costs to open a franchise:
How Much Does a Franchise Cost? - Costs to Open a Franchise

[franchise22]

What is the name of the vending franchise is it 24Seven Vending?

[spielmanmj]

It is Icehouse America (ice vending machines). My dealer isn't charging anything on top of the machine (about 100k) but will collect royalties of 12.5% including marketing fee. I thought it was high as most other dealers have been charging about $20k on top of their cost of the machine and a small yearly fee like $750. Revenues are around 80k on a good machine, maybe 50 on a mediocre one. Expenses run 20-35k.

Any other advice.

Mike