Start-up Costs

A Comparison of Franchise Costs vs. Network Marketing

Business owners know and understand the expense in running a traditional business with inventory overhead, employees, insurance, utilities, government regulations and many other cost factors just to open the door and turn on the lights each day to market their products or services. For this reason, many traditional business owners also work a network marketing business in conjunction with their business or on a part-time basis. Few traditional business offers the ‘time freedom’ provided by a profitable network marketing business. Whether operated on a part-time or full time basis, the network marketing distribution model avoids many cost factors involved with traditional business. Bottom line, a person can start a network marketing business at a fraction of the cost of beginning a traditional business or franchise. The ongoing monthly expense to run the network marketing business is also a fraction of the cost of a traditional brick and mortar business or franchise because it can be run out of a residence – giving the networker tax advantages and write offs that will benefit them no matter how successful they become. There are pitfalls, of course, to any start-up business. For a person who has never run their own business before, both the franchise model and network marketing distribution models offer some distinct advantages. First, the person can research the companies and products with which they want to engage. Both franchise models and network marketing companies offer important basics to offer entrepreneurs their best chance for success, which includes training, support, quality products, a proven track record and mentoring coaches. Let’s begin by looking at the start-up costs involved with some of the most popular franchise opportunities available to you, today in North America. The following two lists are taken from a recent issue of “Entrepreneur” magazine.
2009 Top 10 Franchises America's top franchises from Entrepreneur's Franchise 500
1. Subway
Ongoing royalty fee: 8%

Startup costs: $78,600 to $238,300
Term of agreement: 20 years, renewable

Franchise fee: $15K Franchise fee: $45K Franchise fee: $40K Franchise fee: $45K Franchise fee: Varies Franchise fee: $5K app fee Franchise fee: $25K Franchise fee: $29.95K Franchise fee: $15K Franchise fee: $25K

2. McDonald's 3. Liberty Tax Service
Ongoing royalty fee: Varies

Startup costs: $950,200 to $1.8 million Startup costs: $53,800 to $66,900
Term of agreement: Perpetual, renewable

Term of agreement: 20 years, renewable

4. Sonic Drive In Restaurants
Ongoing royalty fee: 1-5%

Startup costs: $1.2 million to 3.2 million
Term of agreement: 20 years, renewable

5. InterContinental Hotels Grp
Ongoing royalty fee: 5%

Startup costs: Varies
Term of agreement: 10 years (avg), renewable

6. Ace Hardware Corp. 7. Pizza Hut
Ongoing royalty fee: 6%

Startup costs: $243,500 to $1 million
Term of agreement not renewable

Startup costs: $638,000 to 2.97 million
Term of agreement: Not renewable

8. UPS Store/Mail Boxes Etc.
Ongoing royalty fee: 5%

Startup costs: $171,200 to $280,000
Term of agreement: 10 years, renewable

9. Circle K
Ongoing royalty fee: 4%

Startup costs: $161,000 to $1.4 million
Term of agreement: 10 years, renewable

10. Papa John's Int'l. Inc.
Ongoing royalty fee: 5%

Startup costs: $135,800 to $491,600
Term of agreement: 10 years, renewable

The list on the next page from “Entrepreneur” magazine is the “Top 10 Low Cost Franchises for 2009”

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5K-57.3K 4. Now. Total investment: $3. RE/MAX Int'l. Ongoing royalty fee: Varies Total investment: $35K-200K Term of agreement: 5 years. great track records and exclusive patented products that will set you up in business for under $50. Nice! Notice the “TIME” commitment for these franchise contracts! You better be pretty doggone serious about a business before signing on the dotted line with any franchise opportunity. let’s look at the start-up expense for a reputable network marketing businesses with which many people earn much more money than a franchise and without the contractual requirements of time and money. at least. but that is “their” traditional business costs and should be recovered over time and not by charging you with an exorbitant distributor fee. Jani-King Ongoing royalty fee: 10% Ongoing royalty fee: 10% Total investment: $11.4K Term of agreement: 2 years. Where will you hold your classes? Most franchisees lease space in strip centers and incur many other expenses not mentioned here.98K-38.4K-35. music system. because the costs you see above are only the rights to market that brand name. these high enrollment fees are being used to pay enrollment bonuses.7K Total investment: $3. Jan-Pro Franchising Int'l. such as utility costs.3K-168. exercise mats. renewable Ongoing royalty: $32-36/student/mo. Inc. First. Jazzercise Inc. renewable 9. renewable 6.1K+ Term of agreement: 20 years.96K-129. Vanguard Cleaning Systems Total investment: $8. Granted. Merle Norman Cosmetics 7. you should ask where the fee is going.Top 10 Low Cost Franchises for 2009 1. Total investment: $21. If a company has a large enrollment fee like $400 to $500 or more. Inc. For instance. renewable Term of agreement: 10 years. you have a 10-year commitment to pay Jazzercise 20 cents of each dollar you earn. you should never have to pay more than $500 to market any product or service. Instant Tax Service Ongoing royalty fee: 20% Total investment: $39K-89K Term of agreement: 5 years. Ongoing royalty fee: 20% Ongoing royalty fee: 5% Total investment: $2. 2|Page . it’s products and / or services.3K-54.000. Stratus Building Solutions Ongoing royalty fee: 5% Total investment: $33. companies do have marketing expenses and product development costs to cover. renewable Franchise fee: $34K Franchise fee: $8.2K-126K Term of agreement: 5 years.3K+ Franchise fee: $2. Then after all your monthly expenses you incur. and that borders on being fraudulent. More often than not. take a look at the Jazzercise “Total Investment” and the relatively low franchise fee of only $500 to $1.1K 10. stair steps and more. then you also should be getting. renewable OK.7K-37K Franchise fee: $12K-25K 2.2K-38.9K-54K Franchise fee: $0 Franchise fee: $3K-47K Franchise fee: $500/1K Franchise fee: $7.6K-16. If you invest $300 to $500 in ANY company to get started. ServiceMaster Clean Ongoing royalty fee: 4-7% Total investment: $30. $200 to $400 of product for your personal use or for marketing or selling to others for a retail or wholesale profit. This cost is synonymous to a “franchise fee” and gives you the right to market the company’s products and services. renewable 3.8K-44K Franchise fee: $1K Franchise fee: $16. whip out your checkbook… right? Well. There are proven companies with excellent management. renewable Term of agreement: 10 years. not hardly.8K Term of agreement not renewable Term of agreement: Open-ended 8. Companies cover this practice by saying it is a finder’s fee or a “training” bonus.4K Term of agreement: 5 years. Why should you pay a company a large fee to market their products so both you and the company will profit. Kumon Math & Reading Ctr 5. And without the headaches of dealing with employees. Think about it.

Believe in it. but will allow you to help many others who use your product or service. To Your Success. This usually involves a product or service package that is deeply discounted to the new “independent representative. For instance. says “You have to work harder on yourself. unlike a franchise. Everyone Achieves More. if you have to pay more than $2. I have learned much from my coaches and mentors along the way. My mentor. Best of all. Jim Rohn. So. as with any business. These discounted packages often give distributors enough product to create their first customers. Over time. This is a team effort. Although. This takes time. if you are willing to make a time commitment and modest investment into your future growth as a person and entrepreneur. provide a sampling of product for personal use and sharing among family. We welcome motivated people to join us. It helps to know your market and have a passion to help others succeed. so the company is tapping into its distributor base to stay afloat… not a good sign for you or the company. then please contact me or my business partner. You can learn marketing skills over time.The best companies in the marketplace today offer new distributors several options as to how they want to run “their” home-based businesses. profitable business. there are NO ongoing “royalty fees” to pay to a legitimate network marketing company with your profits. Our team is involved with an innovative “A”-rated company and we represent the fastestgrowing team in N America. I have a tremendous opportunity to assist many new and motivated entrepreneurs gain the time freedom and monetary success that I have enjoyed over the years. Become an expert. Most companies offer sales aids and marketing tools at a deeply discounted rate and these are usually provided to cover the companies’ cost of producing. Since I first entered into my first network marketing company in 1985. I believe I can help you avoid many mistakes that I have made. There is a truism in sales and marketing that goes like this: “People don’t care how much you know… until.MaxAchiever. you will have some necessary marketing expenses to conduct your business in a professional manner. Gayle D’Haeseleer. they know how much you care.com 3|Page .com www. Now. I have earned millions of dollars in commission and overrides from just the two companies with which I have worked as an independent marketing representative. Read and begin to gain more knowledge about your products or services.” That is great advice for anyone who wants to break free from the chains of working for someone and who plans to develop their own. manufacturing or printing the material for its distributors.” Be passionate about whatever product or service you decide to offer in the marketplace. friends and business associates. you will become the trainer and mentor for those who join your team. then the company is most likely using the marketing material as a profit center. than you do on your job. winning team. at least. Kevin Venner Cell #: 214-868-4800 kevin@maxachiever. It is within all our grasps. This usually indicates that the products or services of the company are not pulling their weight. so call with questions you may have about building a profitable business with a dedicated.00 for a CD or DVD about a company or it’s products and services. and let’s talk about your options and what it takes to succeed. or to. no doubt… Together.

Gayle D’Haeseleer MaxAchiever LLC Cell #: 772-473-3394 gayle@maxachiever.com Copyright © 2009 4|Page .

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