Franchise vs Independent
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What this tool does
Compare five years of net profit — paying franchise fees vs going it alone.
Other tools for this stage
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- Royalty CalculatorCompare up to three franchise fee structures over ten years, side by side.
- Market-Entry Brief AIPick a sector, market, and model; get an AI brief on fees, law, and risks.
- Client Brief (white-label)For consultants: a client-ready advisory brief in your firm's voice, ready to copy.
What this calculates
The honest version of a question people usually answer with instinct. It runs five years of net profit two ways: as a franchisee paying an initial fee, royalties and ad-fund contributions, and as an independent operator who keeps those but must generate demand, supply and systems alone — then shows the cumulative difference year by year.
What you will need
Revenue under each model. This is the crux, and it must not be the same number. If you believe the brand brings customers you could not attract alone, the franchise revenue line should be higher — and by how much is the real question the comparison answers.
Franchise fees. Initial fee, royalty, ad fund and any required supply arrangements. Mandated purchasing at brand prices belongs here even though it does not look like a fee.
Independent costs. What you would spend building demand and systems yourself: marketing, buying at unnegotiated prices, and your own time developing what a franchise hands you.
How to read the result
Look for the crossover year rather than the five-year total. Franchising typically costs more early — the initial fee lands before any revenue — and earns its keep later through demand and buying power, if it earns it at all. Then check the assumption doing the work: the revenue premium you gave the brand. If the model only favours franchising because you assumed a large premium, go and verify that premium with existing franchisees before you rely on it.
Questions about this tool
Is franchising always more expensive?
In direct fees, yes. Whether it is more expensive overall depends on whether the brand delivers revenue and cost advantages larger than those fees — which is precisely what this comparison is for.
What revenue premium is realistic for a brand?
It varies enormously and no general figure is trustworthy. Ask existing franchisees in comparable markets what they experienced, and use their answers rather than an assumption.
What does the model leave out?
Risk and time. An independent carries more downside variance and much more of the work of building systems; a franchisee accepts constraints on how they operate. Neither shows up in a profit line.
For reference only; not legal, tax, or investment advice. Results depend entirely on the figures you enter — check them against your own quotes and your franchise agreement before acting on them.