If you’re thinking about buying a franchise, the first thing that pops up is the price tag. Those numbers aren’t random – they’re made up of several fees that cover the brand, support, and the right to use a proven business model. Knowing exactly what each fee does can save you money and keep your expectations realistic.
What makes up a franchising fee?
Most franchisors break their charges into three main buckets.
Initial franchise fee: This is the upfront payment you make to get the brand name, training, and access to the operating system. In 2025 it typically ranges from $10,000 for a small local brand to $50,000‑$100,000 for big names like McDonald’s or KFC.
Royalty fee: After you open, you’ll pay a percentage of your gross sales every month. The common range is 4%‑8%, but some food franchises go as high as 12% if they include heavy marketing support.
Advertising or marketing fee: This is a pooled fund that the franchisor uses for national or regional ads. It’s usually 1%‑3% of sales and is separate from the royalty.
Other costs can pop up, like a technology fee for POS systems, a training travel fee, or a renewal fee when the contract expires. All of these add to the total investment you need to be ready for.
Real‑world examples: McDonald’s, KFC, and Indian food franchises
Let’s see how the numbers work for three popular brands.
McDonald’s (2025): The initial fee sits around $45,000. Royalty is 4% of weekly sales, and the advertising contribution is 4% as well. Add a $10,000–$15,000 fit‑out cost for kitchen equipment, and you’re looking at a total outlay of $1 million‑$2 million before you open.
KFC (2025): KFC asks for a $45,000 initial fee, plus a 5% royalty on gross sales. The advertising fee is 4%. Fit‑out costs for a KFC outlet average $150,000‑$300,000, so the total spend is usually between $800,000 and $1.5 million.
Top Indian food franchises (2025): Brands like “Biryani By Kilo” or “Wow! Momo” have lower entry barriers. Initial fees range from ₹10 lakhs to ₹25 lakhs (about $12,000‑$30,000). Royalty is typically 5%‑6%, with a 2% advertising pool. Fit‑out costs stay under ₹50 lakhs ($60,000). That means a first‑time investor can start with roughly ₹70 lakhs‑₹90 lakhs ($85,000‑$110,000).
Seeing those numbers side by side helps you compare the cash you need and the ongoing cost of each brand. If you have a limited budget, a regional Indian franchise might give you a better chance to break even faster.
When you add up all the fees, remember to factor in working capital – you’ll need money to cover rent, staff salaries, and inventory before the business starts turning a profit.
One practical tip is to ask the franchisor for a detailed fee breakdown and a five‑year profit projection. Real owners often share their actual royalty and advertising percentages, which can be lower or higher than the headline numbers.
Bottom line: franchising fees are more than just an upfront cost. They are a mix of entry, ongoing, and optional charges that shape your cash flow. Understanding each part, looking at real examples, and planning for extra working capital will give you a clearer picture of whether a franchise is the right move for you in 2025.
Curious about how much you need to open a McDonald's in India? This article breaks down the real numbers you’ll face to get started with the world’s biggest fast-food brand. Discover the upfront investment, ongoing royalty payments, and what’s actually included in those fees. Get tips to avoid hidden costs and find out why banks look at more than just your savings. Learn what makes McDonald's one of the priciest – and possibly smartest – food franchise bets around.
