Franchise vs Independent Calculator
Should you buy a franchise or go independent? This calculator compares the true 5-year cost including franchise fees, ongoing royalties, and ad fund contributions. Tools like FRANdata charge $220 per document for this analysis — ours is free.
Independent — 5-Year Total
$100K
Franchise — 5-Year Total
$362.6K
Franchise Premium
+$262,615
Extra cost to go franchise over 5 years
Cost Breakdown: Independent vs Franchise
Cumulative Cost Over Time
| Year | Independent | Franchise | Difference |
|---|---|---|---|
| Upfront | $100,000 | $230,000 | +$130,000 |
| End of Year 1 | $100,000 | $254,000 | +$154,000 |
| End of Year 2 | $100,000 | $279,200 | +$179,200 |
| End of Year 3 | $100,000 | $305,660 | +$205,660 |
| End of Year 4 | $100,000 | $333,443 | +$233,443 |
| End of Year 5 | $100,000 | $362,615 | +$262,615 |
Understanding Franchise Costs
Franchise fee is a one-time payment for the right to use the brand. It typically ranges from $10K–$50K.
Royalty is an ongoing percentage of gross revenue paid to the franchisor, usually 4–8%. This is the biggest long-term cost difference between franchise and independent.
Ad fund is an additional 1–3% of revenue for national/regional marketing managed by the franchisor.
Key question: Does the brand recognition, training, and proven system justify the premium? For some industries (like fast food), franchise success rates are significantly higher. For others (like cleaning), independent operators often do just as well.