Franchise vs. Buying a Business: Key Differences & Costs

Quick Answer

Buying a franchise provides a proven brand and operational support in exchange for ongoing royalties (ranging from 0% to 43%), whereas buying an independent business offers full creative control and no royalty fees but lacks a pre-established support system and brand recognition.

Source: FranchiseStack · August 2026

Based on analysis of 192 franchises in FranchiseStack's database, the choice between franchising and buying an independent business hinges on the trade-off between autonomy and risk mitigation. Franchises like McDonald's require high initial investments ($1.3M+) but offer global brand equity, while low-cost options like eXp Realty ($3K-$8K) provide scalable infrastructure for a fraction of the cost of starting an independent brokerage from scratch.

Key Data Points

Royalty rates vary significantly across brands, from 0% (RE/MAX, Kumon) to as high as 43% (7-Eleven).
Initial investment ranges are broad, starting as low as $3,000 for eXp Realty and exceeding $4.7 million for Burger King.
Food & Restaurant franchises typically require the highest capital, with brands like Taco Bell reaching up to $3.37M in startup costs.
Service-based franchises like Jan-Pro offer lower entry points, with initial investments starting at $4,000.

Frequently Asked Questions

Is it cheaper to buy a franchise or start an independent business?

It depends on the industry; while some franchises like Jan-Pro start at $4K, independent startups avoid ongoing royalties which can reach 12% (Jackson Hewitt) or more of gross sales.

What are the main advantages of a franchise over an independent business?

Franchises offer proven systems, established brand recognition, and corporate training, as seen in successful models like The UPS Store or Dunkin'.

Do all franchises charge ongoing royalty fees?

No, certain franchise models like RE/MAX, Kumon, and Ace Hardware report 0.00% royalties in their FDD data, though other fees may apply.

Which industry has the highest franchise investment requirements?

The Food & Restaurant sector generally requires the most capital, with Burger King ($4.7M+) and Dairy Queen ($2.5M+) representing the high end of the spectrum.

Can I buy a franchise for under $10,000?

Yes, data shows low-cost franchise options exist, such as eXp Realty ($3K-$8K) and Jan-Pro ($4K-$56K), which are significantly cheaper than many independent business acquisitions.

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