When assessing urgent care franchises to invest in, prospective franchisees should have all the information necessary to make a proper decision and that includes franchise fees.
Franchise fees are the cost of entry to be part of an established brand. The fees will vary depending on the type of franchise you purchase. However, transparency is critical. Trusted franchise companies will be upfront about their franchise fees, even more so than what they are required to disclose in their franchise disclosure document (FDD).
Potential franchisees should ask plenty of questions and do research on the company they are buying into. Here are some of the basic fees most franchises will charge, as well as some related costs a franchisee can expect to run into.
Initial Franchise Fee
Not to be confused with the total upfront investment, the initial franchise fee is a one-time payment made to the franchisor upon signing the Franchise Agreement. For example, American Family Care charges a franchise fee of $60,000. For every franchise opportunity, this fee is disclosed in the Financial Disclosure Document (FDD) or sometimes right on their websites.
One of the common misconceptions in franchising is that franchise fees pay for the use of a brand’s name. With the best franchisors, your investment covers training, site selection assistance, marketing, and operational support as you prepare to open your urgent care clinic.
A royalty fee is a regular fee, paid weekly or monthly based on a percentage of gross sales, that the franchisee pays to the franchisor; to be used for the ongoing support of current franchisees and in helping grow the system.
The percentage used to determine the fee may range from 4 percent to 12 percent, depending on the franchise. The royalty fee at American Family Care is on the lower end of the scale— at a reasonable 6 percent.
Some franchise systems charge a fixed or minimum fee rather than basing the royalty fee on a percentage.
Prospective franchisees can find the amount or percentage used to determine this payment, as well as the frequency it must be paid, in the franchisor’s FDD.
Advertising or Marketing Fee
One of the advantages of being part of a franchise system is brand awareness, and each franchisee must pitch in to enable the franchisor to develop and carry out national advertising and promotions that benefit owners.
The franchisor may create an advertising fund to contribute to its programs for creating and placing ads. These marketing/advertising fees typically are a percentage of monthly revenue, often between 1 and 4 percent.
Location and Build-Out Costs
You will need to purchase or lease a location for an urgent care clinic if you do not already have one. Different franchises have specific size and location requirements to qualify a space as suitable for their brand. Other critical factors will include demographics, parking spots, and visibility.
Franchisors like American Family Care understand the importance of selecting the perfect location for your urgent care clinic. Their team of experts assists with site selection using sophisticated market analysis tools and a comprehensive database of commercial real estate brokers in your area.
Your investment in build-out can and most likely will vary based on a range of factors. They include location, real estate market values, building size, and starting condition. Working with the franchisor to help select a location that meets their specifications will give you a better sense of how much it will cost to get your business up and running. The price of renovations, construction, and other improvements will factor greatly into your overall franchise startup costs.
Franchising with American Family Care
Opening an independent urgent care clinic can come with a lot of unexpected costs and hurdles — not to mention requiring a lot of outside assistance. American Family Care is candid about franchise costs and provides unparalleled guidance and support through every step of the opening process. Unproven healthcare businesses often have difficulties securing funding, which can prove prohibitive, particularly for first-time medical entrepreneurs. Backed by more than three decades of franchising experience and brand-name excellence, American Family Care is committed to seeing our franchisees thrive.
Founded by Dr. Bruce Irwin with a single location in 1982, American Family Care has pioneered the concept of convenient, patient-centric healthcare. Today, with more than 220 clinics and 600 in-network physicians caring for nearly three million patients a year, AFC is the nation’s leading provider of urgent care, accessible primary care, and occupational medicine. Ranked by Inc. magazine as one of the fastest-growing companies in the United States, AFC’s stated mission is to provide the best healthcare possible in a kind and caring environment while respecting the rights of all patients, in an economical manner, at times and locations convenient to the patient.
Click here to learn more about franchising opportunities with American Family Care.