Just like a traditional retail store, a majority of franchise outlets operate out of leased space. The total cost of renting this space will most likely be the largest investment you will make in establishing your franchise business. Obviously, you want to rent your space at the lowest possible rate and this can be accomplished via careful negotiation of the lease. You may wish to get the first three or six months free of rent, because your business is new and just getting started and not generating revenue.

Another important factor is the cost of common area maintenance (CAM) and tax charges - under certain circumstances these expenses can exceed the cost of basic rent. Proper negotiations can persuade a landlord to offer "leasehold improvement allowances."  This provides you funds for the refurbishing of your business location. Now, this may result in a somewhat higher monthly rent, it ultimately can save you tens of thousands of incidental expense.

Certain franchise businesses, especially in the fast food arena, require the construction of the retail outlet. Obviously, this required a major outlay of cash. When one is getting involved at this level take a tip from existing franchisees who says that competitive bidding before selecting a general contractor or subcontractors would have saved them many thousands of dollars in setting up the cost of their new outlet. This philosophy will sever you well with all the other aspects of doing business. Competitive bidding and old fashioned haggling over price will save you money … especially in today's competitive marketplace.

Depending on the dynamics of your particular franchise business you will need business equipment. The equipment required for your business to properly function can range from computers and software, to stoves and refrigerators, to automotive lifts … all this can be quite expensive. One way to help defray the cost of doing business is to be a smart shopper and carefully consult with many vendors to secure the best prices. Another cost saving technique is to buy used equipment or research aftermarket suppliers which can result in truly impressive savings. One you found the equipment you need consider different financing options (i.e. loans, leases, etc.) with their purchase. The strategy here is to conserve your capital resources for other business needs.

The most significant cost of doing business on an ongoing basis is the cost of labor. Your franchise company will provide you with expert guidance on what your staffing requirements should be along with what their proper compensation should be.  It is to your best interest to follow their advice. If you hire too many people or pay them too much - it will have a serious negative affect on your bottom line profits.

Once again the franchise company knows best how to promote your new franchise business and their advice should be taken to the letter. This is one of the many advantages of the franchise business model. Rather then trying to structure an advertising or marketing campaign by scratch … your franchise company will help you launch your new outlet and provide marketing support on an on-going basis. Too often, new franchisees can be enticed into local market advertising programs that are not as effective as those create by their franchise provider. Just as in managing labor, it is best for the franchisee to stick to the plans established by professionals at their franchise company.