How Much Money Does it Take to Invest in a Business Coaching Franchise?
Today I want to answer a frequently asked question we get from business coaches around the world: how much money does it take to invest in a business coaching franchise?
Of course, this varies from franchise to franchise, but the typical investment is $25,000 to $50,000 for the actual franchise license and then an additional $10,000 to $20,000 for the training, which is usually a week to ten days.
In addition, royalty fees begin almost immediately in most cases. This could be a fixed amount or a percentage of your revenue, and is usually paid usually. Monthly royalty fees are often $1000 to $1800, which a lot like having a second mortgage. If it’s a percentage-based system, it could be anywhere from 10%-20%.
If you are going to go with a franchise, we would suggest a franchise that takes a percentage instead of a flat royalty because this way, the franchisors are more invested in your success. If a franchisor is willing to generate their own income based on your results, they’ll do more to ensure you have adequate support (though even then, that’s not always the case). So as part of your due diligence, find a franchise that takes a percentage instead of charging you a flat fee.
In addition, most franchisors also charge what we call a brand-building fee or a marketing fee. Typically, that’s another 2%-5% of your revenue.
Should I Invest in a Business Coaching Franchise?
This is a question only you can answer for yourself. But remember…
- You’ve got the $25,000 to $50,000 for the license;
- $10,000 to $25,000 for training;
- The monthly royalty of $1000 to $1800 a month or a percentage;
- And your brand-building fee, which is another 2-5% of your revenue.
When you add all that up, it’s in common for a first-year franchisee to spend more than $100,000 to get their business set up–and you are going to typically go through another $50,000 to $100,000 in working capital while you try to learn the business and get revenue coming in.
We always tell business coaches who are deciding whether or not to invest in a business coaching franchise that they should count on at least $200,000 in working capital.
Of course, this is just a general idea–for a more detailed breakdown, you need to read the specific franchise disclosure documents that come with your due diligence process as you’re looking what to pick as a franchise. And for another great due diligence resource, download a copy of our free ebook, The Business Coaching Franchise Buyer’s Guide.