Are franchise fees negotiable?

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Franchise fees are typically non-negotiable but you still have options that may help you -- especially in today's difficult economy.

Many franchise companies are now offering direct or third-party financing options that allow you flexibility in terms of the payment of your franchise fees. These can be very valuable options for you since soft costs such as franchise fees have traditionally been hard to finance and had to be paid from your cash reserves.

The reason that most fees are not negotiable is that the franchise company is required to disclose in their Federal Disclosure Document (FDD) any variation from the standard fee structure that they allow for any franchisee. It would therefore be a lot of work for them to keep track of every special deal they made and make sure they were disclosed properly. In addition, as soon as they published the special terms, every other franchisee would insist on getting the better deal so it would effectively change the standard fees.

You have a much better chance to affect the "deal" with the franchisor by negotiating for additional services and support for your franchise or perhaps for discounts from other suppliers that the company may have influence with.

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