Two franchise brands run a music school. Here they are beside the independent version of the same business, with each brand’s fees as it publishes them and worked out in dollars. A brand can bring customers an independent has to earn one by one. The question is whether it brings in more than it costs.
Typical for a music school: $150k to $800k in sales, and the owner keeps 15% to 30% after paying for its own marketing. Change either to your own numbers.
Work each brand out at
How the two sides are counted
Sales. A brand’s name brings customers an independent wins one at a time, so each brand is worked out at the sales it reports where we have them, and at yours where we don’t.
Marketing. On your own you pay for all of it, about 3% of sales here (the SBA’s usual range for ongoing marketing). The ad fund does part of that job, so it is counted once, not twice.
Survival. New franchised businesses were about 5 to 6 points more likely to make it through their first two years in Census data, and about half of all new businesses close within five years. It is not in the dollars; each brand’s details give the sources.
Your own music school and each brand, side by side
The independent version
Your own music school
Built and run under your own name
Cost to open
$75k to $274k
Annual sales
$350ktypical
Franchise fee
None
Royalty + ad fund
Noneall marketing is yours
$77,000
The owner keeps in a year, after about $11k of marketing
Taking new owners
Bach to Rock
Music school
Total investment
$259k to $574k
Avg. annual sales
$516k
Franchise fee
$50k
Royalty + ad fund
7% + 3% of sales
$77k
The owner keeps in a year at $516k in sales (what it reports), after $52k to the brand
about the same as on your own
Taking new owners
School of Rock
Music education
Total investment
$378k to $756k
Avg. annual sales
$640k to $672k
Franchise fee
$60k
Royalty + ad fund
8% + 3% of sales
$92k
The owner keeps in a year at $656k in sales (what it reports), after $72k to the brand
$15k more a year than on your own
Before you sign: what to read in the disclosure document
Every franchisor must give you its Franchise Disclosure Document at least 14 days before you sign or pay. These are the parts that answer the questions above.
Items 5 to 7, the fees and the investment. The franchise fee, every other fee (technology, training, transfer, renewal), and the full opening budget, including working capital.
Item 19, what owners earn. Whether the brand states owner sales or earnings at all, and for which units. Put its figures in the boxes above in place of the typical ones.
Item 20, units opened, closed and sold. How many owners left in each of the last three years, and a list of current and former owners you can call.
Item 12, the territory. Whether you get a protected area, and what the brand can open or sell inside it.
Item 21, the franchisor’s own finances. Whether the company behind the brand is in good health.
smbnest is a self-assessment tool, not individualized advice. Fees are as each brand publishes them on its franchising page and in its disclosure document, reviewed in the month shown, and change; the figures in dollars are worked out at the sales you enter and are not a forecast. We never take a cut of your deal or a fee from a franchisor. Before you sign, speak with a franchise attorney and a qualified financial adviser, and call owners from the disclosure document.
Your guidesmbnest
The guide is an automated assistant. Answers come from this business’s model, its sources and your plan; they are general information, not legal, tax or financial advice. Talk to a person