by 
The Curious Bag
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Franchises are businesses that expand by extending the rights to sell a trademarked concept and product to other entrepreneurs. The most common examples of franchises are fast food restaurants, such as McDonald's.
Costs
In most franchise arrangements, the entrepreneur pays an upfront fee to the company in exchange for the rights to its products and marketing. Subsequently, the entrepreneur pays a set percentage of revenue to the company.
Initial Fees
To start a franchise, you will need to pay an initial franchise fee. These costs vary depending on the company but here are two examples: McDonald's charges $45,000 as an initial fee while Subway charges $15,000.
Location Costs
You will need to secure a location for your franchise as well. If you rent an existing Subway location, for example, your upfront costs will be $2,000 to $12,000. McDonald's charges around $500,000 but only 25 percent needs to be paid upfront. The rest can be financed for a period of seven years or less.
Financial Requirements
Most franchises require the initial funds come from non-borrowed sources, including your savings, real estate equity or personal investments.
Other Costs
In addition to the initial fees, you may also need funds to purchase inventory and equipment, to hire staff, to advertise (this is sometimes included in the franchise costs) and to make location improvements.
Source:
Franchise.com: Basics - What Is A Franchise?
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