The Real Cost of Franchising Right: Part 1
Success in franchising depends on doing things the right way, not the cheap way. Those who shortcut the process rarely scale past the starting line.
In this post, I’ll share insights from my experience, including the mindset shifts, financial commitments, and strategies that separate successful franchisors from those who never get off the ground.
The Cost of Doing it Right
Many entrepreneurs start with the question, “How much can I save?”
My response is simple: you’re asking the wrong question.
If you want to build a multimillion-dollar business, you cannot cut corners. The reality is most franchise systems in Australia don’t reach critical mass. Why? Because they fail to invest in the infrastructure, systems, and support needed to grow sustainably.
The most common mistake I see is undercapitalisation, starting a franchise program without committing the necessary resources.
The Risks of Doing It Cheap
Franchise networks built on a shoestring budget often suffer from:
Poorly developed systems.
Inadequate support for franchisees.
Weak marketing and recruitment strategies.
These weaknesses lead to stagnation and reputational damage, making it nearly impossible to recover.
Franchising is an Investment, Not a Shortcut
Franchising is not a quick fix or an easy way to get rich overnight. Rather, it is a strategic investment that demands time, effort and commitment to build a sustainable, scalable business.
Long-Term Commitment
Successful franchising calls for careful planning, consistent execution and ongoing support. It is about laying down a strong foundation that can grow steadily over years, not weeks or months.
Upfront Investment
Like any serious business venture, franchising requires proper capital investment. In most cases, you will need to commit between $150,000 and $200,000 or more to develop the systems, training, marketing and infrastructure needed to support growth, including franchisee lead generation marketing for the first 12 months.
Operational Discipline
Franchise networks succeed when they are built on replicable processes and high standards. This means maintaining quality, supporting franchisees with effective training and continually refining your business model to stay competitive.
Building Enterprise Value
The true reward of franchising comes from creating a brand and network that increase in value with every new location. This enterprise value builds over time, delivering exceptional returns for those who invest wisely and with patience.
I’ve seen it happen time and again: businesses that commit to franchising with the right investment and strategy achieve valuations in the tens, even hundreds, of millions within five to ten years.
The Minimum Investment
So, what does it take to get started? The minimum investment to develop and market a solid franchise program is around $150,000 to $200,000.
This includes:
Franchise lead generation marketing for the first 12 months.
Designing and documenting robust systems and processes.
Creating professional marketing and sales materials.
Conducting thorough feasibility studies to ensure your business is truly franchise-ready.
Why is this important? Because your franchisees are often committing $250,000 or more of their own capital. If you haven’t made a serious investment in building a strong, proven franchise system, how can you reasonably expect them to take that leap?
Investing upfront in your franchise infrastructure not only demonstrates your commitment but also builds the foundation for long-term success and trust with your franchise partners.
“ If you haven’t made a serious investment in building a strong, proven franchise system, how can you reasonably expect franchisees to take that leap?”
Is Your Business Ready to Franchise?
At DC Strategy, we start every franchise engagement with a feasibility study. It’s the only way to know if a business is ready to scale.
We ask questions like:
Is the business consistently profitable?
Can your model be replicated in other locations?
Do you have the ability to support franchisees operationally?
And if the answer is no, that’s OK. DC Strategy’s consulting services offer the expertise to help you build a business that is truly ready to franchise.
Are You Ready?
Download our free Franchise Readiness Checklist. It’s a simple yet effective tool to help you assess your preparedness and set the stage for success.
Growth Begins with the Right Foundation
Franchising is one of the most powerful business models available, but only if you’re ready to invest properly. The decision to franchise should never be driven by shortcuts. It should be driven by strategy, structure and long-term thinking.
If you want to build something that lasts, start by doing it right.
About Rod Young
Rod Young is considered one of the world’s leading franchise consultants.
He is the founder and Chairman of DC Strategy, Australasia’s premier franchise advisory group.
He is also the Executive Chairman and Global CEO of Cartridge World, the 60 country, 1400 store global printer, cartridge and printing supplies network, and sits on the board of several leading and emerging domestic and international franchise networks.
DC Strategy develops franchise networks and brands, providing franchise consulting and legal advice, branding, marketing and online presence, franchisee recruitment and international strategy.