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Financial Planning At The Fast Food Market

Satisfactory Essays

A. Initial Financial Start
Opening a franchise requires extensive financial planning through the evaluation of personal finances compared to vital start-up costs. No two franchises incur the same start-up costs, so having a substantial amount of capital available from the beginning is crucial. Franchise costs stem from the desire to open a franchise and the associated target industry. Franchises within the fast food segmentation require food inventory while franchises in the pet care segmentation require pet supply inventory. As a result, franchise entry fees range anywhere from $5,000 to over $5 million. Besides entry fees, franchise owners are required to pay administrative fees for legal and accounting services to review the franchise agreement and monitor the business’ finances respectively. Franchise costs certainly add up with the addition of both franchise fees and general, selling, and other operating expenses. A franchise cannot be successful if it does not have a location, employees, inventory, supplies, and equipment. Overall, a significant amount of capital is necessary to take on the financial obligations of a franchise (Goldberg 2016).
The franchising costs in 2016 are nothing compared to the costs incurred by franchise owners in the 40s. McDonalds, Kentucky Fried Chicken, and Howard Johnson Motor Lodges began offering franchising opportunities to interested parties at cheap franchise costs. Ben Franklin stores increased their popularity when an idealistic army

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