Capital Requirement
As we’ve seen in previous chapters, starting a new venture can be costly in term of both time and money. The franchise offers an opportunity to start a new venture with up-front support that could save the entrepreneur significant time and possibly capital. Some franchisors conduct location analysis and market research of the area that might include an assessment of traffic, demographics, business, conditions, and competition. In some case, the franchisor will also finance the initial investment to start the franchise operation. The initial capital required to purchase a franchise generally reflects a fee for the franchise, construction costs, and the purchase of equipment.