Chick-fil-A charges a $10,000 franchise fee. Anytime Fitness asks $42,500, and a Dunkin’ territory can run $40,000 to $90,000. If you ranked those by the check you write at signing, you would have the order almost exactly backward for what each one costs to own. Most initial franchise fees in the US fall between $20,000 and $50,000, while the total cost to buy a franchise and open the doors usually runs from about $100,000 for a small service brand to $1 million or more for a drive-thru restaurant.
The franchise fee is a one-time license payment. The money that decides whether the business works is what comes after it: a royalty on every dollar of sales, a marketing fund contribution, technology charges and a renewal fee when the term ends. This guide prices the fee, then shows how to stack it against those ongoing charges so two offers can be compared honestly.
What a franchise fee is, in the franchisor’s own paperwork
Under the FTC Franchise Rule, every franchisor selling in the US must give you a Franchise Disclosure Document (FDD) at least 14 calendar days before you sign or pay anything. Three of its 23 items hold nearly all of the cost information:
| FDD item | What it lists | What to look for |
|---|---|---|
| Item 5: Initial fees | The franchise fee and anything else paid before opening | Whether it is refundable, and any discounts for veterans or extra units |
| Item 6: Other fees | Royalty, ad fund, technology, training, renewal, transfer, audit and late fees | Fees stated as “then-current” amounts the franchisor can raise later |
| Item 7: Estimated initial investment | Low and high total cost to open, including the fee, buildout, equipment and working capital | How many months of working capital the “additional funds” line assumes |
The fee itself typically pays for the right to use the brand and system for the term of the agreement (often 10 years), initial training and help picking a site. It is rarely refundable once training starts. What it does not buy is the store: the buildout, equipment, signs, opening inventory and cash to survive the first months are all extra and show up in Item 7.
Five well-known brands: the fee next to the ongoing bill
These figures come from recent FDDs as summarized by franchise lenders and data sites in 2025 and 2026. Brands update their FDDs every year, usually in spring, so confirm the current document before relying on any number.
| Brand | Initial franchise fee | Ongoing fees | Total initial investment |
|---|---|---|---|
| Chick-fil-A | $10,000 | About 15% of sales plus roughly half of pretax profit | Mostly paid by the company; operator puts in the $10,000 |
| The UPS Store | $29,950 | 5% royalty + 2.5% brand fund | About $209,000 to $496,000 |
| Anytime Fitness | $42,500 | Flat $649/month royalty + $649/month ad fee | About $98,000 to $523,000 |
| McDonald’s | $45,000 | 5% service fee on new restaurants, 4%+ advertising, plus rent tied to sales | About $1.5 million to $2.8 million for a new build |
| Dunkin’ | $40,000 to $90,000 by territory | 5.9% royalty + 5% advertising | About $255,000 to $1.7 million |
The pattern is clear once the columns sit side by side. A low fee often signals a franchisor that makes its money later, and Chick-fil-A is the extreme case: the company builds and owns the restaurant, then keeps a large share of what it earns. Our Chick-fil-A franchise cost guide and McDonald’s franchise cost guide walk through both models in detail.
Two offers, one sales forecast, a $143,500 difference
Hypothetical example, not real brands or quotes. You are comparing two service franchises. Both FDDs suggest a mature unit can reach about $600,000 in yearly sales, and both offer a 10-year term. To keep the math simple, assume sales are flat at that level for all ten years.
| 10-year cost | Brand A | Brand B |
|---|---|---|
| Initial franchise fee | $25,000 | $49,500 |
| Royalty | 6% = $360,000 | 4.5% = $270,000 |
| Marketing fund | 2% = $120,000 | 1% = $60,000 |
| Technology fee | $400/month = $48,000 | $250/month = $30,000 |
| Total paid to franchisor | $553,000 | $409,500 |
| Share of 10-year sales | 9.2% | 6.8% |
Brand B’s fee is nearly double, yet it costs $143,500 less over the term. Put another way, every extra point of royalty on $600,000 in sales is $6,000 a year, so a 1.5-point gap wipes out a $24,500 fee difference in under three years. Run this table with the sales figure you actually believe, not the franchisor’s best case, and add a line for any renewal fee you would owe to keep going after year ten.
Flat fees change the math. At $1,298 a month, the Anytime Fitness royalty and ad fee total about $15,600 a year no matter how busy the club gets, which rewards owners who grow membership and hurts those who do not.
The Item 6 lines that surprise new owners
Royalty and ad fund rates get the attention in sales meetings. The smaller lines further down Item 6 are where owners on franchise forums say their budgets slipped. Typical ranges below are drawn from published FDD summaries; your brand’s numbers can be higher or lower.
- Royalty. Usually 4% to 9% of gross sales, sometimes up to 12% for service brands; some charge a flat monthly amount. It is due whether or not you are profitable.
- Brand or marketing fund. Commonly 1% to 5% of sales. Many agreements also require a separate local advertising spend that you pay to vendors, not to the franchisor.
- Technology fees. Point-of-sale, booking software, apps and email systems, often billed monthly per location and often described as “subject to change.”
- Training for new managers. The first round is usually included in the franchise fee; training a replacement manager later often is not.
- Renewal and transfer fees. Charged when the term ends or when you sell. Some are flat, others are a percentage of the franchisor’s then-current initial fee. Selling the business usually needs franchisor approval and buyer training.
- Remodel requirements. Not a fee, but many agreements require a refresh every several years at your cost, which can rival the original franchise fee.
How much it costs to buy a franchise and open
The franchise fee is often only 5% to 15% of the Item 7 total. The rest depends mainly on how much real estate the concept needs:
| Franchise type | Typical total investment | Where the money goes |
|---|---|---|
| Home-based or mobile service (cleaning, lawn, tutoring) | About $25,000 to $150,000 | Fee, van or equipment, launch marketing, working capital |
| Retail or storefront service (shipping, fitness studio) | About $100,000 to $500,000 | Lease deposits, buildout, fixtures, equipment |
| Quick-service restaurant, inline | About $250,000 to $800,000 | Kitchen equipment, buildout, signs, opening inventory |
| Freestanding drive-thru restaurant | $1 million to $2.5 million+ | Land or ground lease, construction, equipment |
Most buyers finance part of it. Since June 1, 2025, the SBA has required a 10% equity injection from borrowers on 7(a) loans for businesses under two years old, which includes most new franchise units, and it reinstated its Franchise Directory of eligible brands. On a $400,000 project, plan on at least $40,000 of your own cash for the loan, before any personal reserve. Our cost to start a business guide covers the costs that apply whether or not you franchise, such as forming an entity and insurance.
Franchise fee rules and changes heading into 2027
In July 2024, FTC staff issued guidance stating that charging franchisees fees not disclosed in the FDD may violate the Franchise Rule and the FTC Act, and the agency issued a policy statement against contract clauses that stop franchisees from reporting problems to the government. In practice that pushes franchisors to list every fee, including technology and “pass-through” charges, in Item 6. If a franchisor bills you for something you cannot find there, ask for the FDD reference in writing.
We found no announced federal rule changing how franchise fees are set or disclosed for 2027. Franchisors set their own fees and most file updated FDDs each spring, so 2027 fee schedules will appear then; expect similar or slightly higher initial fees and technology charges. Buyers in registration states such as California, New York, Illinois, Maryland, Minnesota, Virginia and Washington also get a state review of the FDD before a brand can sell there.
Before you sign: questions for the franchisor and for three owners
Ask the franchisor:
- Which Item 6 fees can change during my term, and by how much have they risen in the last five years?
- What will renewal cost, and what remodel will you require to renew?
- Is the fee lower for veterans, existing owners or a second unit?
Ask current and former owners (Item 20 lists their contact details):
- What did you spend in total before you broke even, compared with the Item 7 high estimate?
- Which monthly charges were bigger than you expected?
- Would you sign again at today’s fees?
Then pay a franchise attorney to read the agreement before you send any money. Their fee, often a few thousand dollars, is small next to a ten-year contract. This is general information, not legal or financial advice.
Franchise fee questions
Is a franchise fee refundable?
Usually not, or only partly. Many agreements allow a partial refund if the franchisor rejects you during training or if no site is found within a set time, minus expenses. Item 5 of the FDD must state whether the fee is refundable and under what conditions.
Is a franchise fee tax deductible?
Generally it is not deducted all at once. The IRS treats a franchise as a Section 197 intangible, so the initial fee is usually amortized over 15 years. Royalties and ad fund payments are typically deductible as ordinary business expenses. Confirm with a tax professional.
Can you negotiate a franchise fee?
Large franchisors rarely negotiate with single-unit buyers because they must treat franchisees consistently. Discounts are more common for veterans, existing owners and multi-unit deals. Smaller, newer brands are sometimes more flexible, but any change should appear in writing in the agreement.
Do you pay a franchise fee for every location?
Yes, normally each unit has its own franchise fee. Multi-unit buyers often sign a development agreement with a development fee paid up front, and later units may carry a reduced fee. The schedule and deadlines for opening each unit are spelled out in the agreement.
How much is it to buy an existing franchise location?
Buying a resale means paying the seller a price based on the unit’s earnings, plus a transfer fee to the franchisor and often required upgrades. The new owner usually skips the full initial franchise fee but must still pass the franchisor’s approval and training.
Related cost guides
- McDonald’s franchise cost
- Chick-fil-A franchise cost
- 7 Brew franchise cost
- Cost to start a business
- LLC cost by state
- Business insurance cost
More related guides: Low cost franchises 2027
Pricing method: typical fee, royalty and marketing ranges from Franzy’s franchise fee study and other published FDD summaries; brand figures from recent FDDs as summarized by Franzy, Clear Value Lending and other franchise data sources in 2025 and 2026; FDD disclosure requirements from the FTC Franchise Rule and its July 2024 staff guidance on undisclosed fees; SBA lending rules from SOP 50 10 8 as reported by Franchise Times. Investment ranges by franchise type are typical published ranges. The 10-year comparison is a hypothetical calculation, not a real offer. Prices were researched in November 2026 for 2027 planning and may change; always confirm with the franchisor’s current FDD and a licensed franchise attorney or accountant. See our disclaimer.
