First, let us take a look at what a franchise actually is.  It is a business arrangement between a company who has developed a "proven business system" (the franchisor) and a second party (the franchisee) who is granted the right by contract to carry on a similar business in a prescribed fashion at a specific location. This agreement includes the right to use a nationally recognized trade name or logo like: Hawkeye's Home Sitters®, McDonald's, Subway, Midas Muffler, Blockbuster Video, etc. That's great because you can be in business for yourself, but not by yourself as most franchisors include a variety of ongoing forms of support for the franchisee. As a result, chances for business success increases dramatically.

Just how successful are franchises?  The U.S. Department of Commerce reports that the potential business success of a franchisee is eight times greater than that of an independent operator. Statistics also confirm that after 5 years in business, franchisees have a 93% survival rate, whereas only 23% of the independent operators are still operating. Hawkeye's Home Sitters® is a survivor as it has seen numerous Home and Pet Sitters come and go since 1987.

What kind of fees do franchisors charge for the right to use this proven business system?  In most cases there is a franchise fee, a royalty fee and an advertising fee. Each is different, so let me explain.

A franchise fee is the up-front money paid to gain access to the business system. It is usually due when the contract is signed and includes training, a start-up package, operations manuals, business forms, and assistance before opening. Franchise fees range from $2,000 - $100,000 but averages around $25,000. Hawkeye's Home Sitters® franchise fees vary from a modest $4,495 to $10,995 depending upon population of territory.

The royalty fee allows you to stay in the business system. It is compensation to the franchisor for continuing support and a monthly payback for what the franchise is actually worth. It is usually due monthly and is based on a percentage of gross sales. Most royalty fees range from 1% to 15% but averages around 6-7% of gross monthly sales. Hawkeye's Home Sitters'® royalty fee is based at 4%, considerably lower than the industry standard.

An advertising fee is usually a monthly contribution anywhere from 0-5% of gross sales. It is a general pool of funds for the purposes of national advertising and promotions which benefits all franchisees. The combined advertising power of many is much greater than if a single business tried to establish national recognition. It is money well invested. Hawkeye's Home Sitters'® advertising fee is only 2% of monthly gross sales.