Buying a franchise will cost you more than the high end of the investment range disclosed in the Franchise Disclosure Document (FDD).

Let me explain.

Buying a franchise is a major financial decision. It is not just about covering the initial franchise fee and build-out costs. To set yourself up for success, you need to think beyond the numbers you see on the glossy brochure or the FDD.

Here is the truth: you need to have the high end of the investment range for your chosen franchise plus at least one year of living expenses.

Why? Because profitability takes time.

The FDD Investment Range Is Just the Beginning

Every franchise system lists an investment range. It usually includes the franchise fee, equipment, leasehold improvements, initial inventory, and other startup costs. But here is the thing: most of these ranges are just that—estimates.

For example, the FDD might tell you that starting a location will cost between $150,000 and $300,000. That is a big gap. Do not make the mistake of planning for the low end. Instead, always assume your costs will land at the high end.

Why? Because unexpected expenses pop up. Maybe your local market has higher construction costs. Maybe you need extra inventory because demand surges after your grand opening. Or maybe you need to hire additional staff to meet customer needs.

If you only plan for the low end of the range, you risk running out of cash before your franchise even gains traction.

Covering Your Living Expenses

Now let us talk about living expenses. This is where many franchisees falter.

When you open a franchise, your business will likely not generate a profit immediately. In fact, it might take 6, 12, or even 24 months to reach profitability, depending on your industry. During that time, you still have personal bills to pay, rent or mortgage, utilities, groceries, insurance, and maybe even childcare or student loans.

If you do not have at least one year of living expenses saved up, you may feel immense financial pressure. And that pressure can lead to bad decisions, like cutting corners, overextending yourself, or even giving up on your business altogether.

Think of it this way: having a financial cushion allows you to focus on building your franchise without worrying about how to pay your own bills. It buys you time and peace of mind.

The Ramp-Up Period

Every franchise has a ramp-up period. This is the time it takes to build your customer base, streamline operations, and start seeing consistent revenue. During this period, you are likely reinvesting most, if not all, of your earnings back into the business.

Marketing costs, employee training, equipment maintenance, and operational adjustments can eat into your early revenue. That is normal. What is not normal is expecting to take home a paycheck in those early months.

The smartest franchisees understand that success takes time. They plan for a year—or more—of lean personal finances while their business gets off the ground.

Why the “High-End Plus One Year” Rule Works

The high-end investment range ensures you are not caught off guard by unexpected costs. The one-year living expense rule ensures you can focus on your business without added stress. Together, these two financial principles create a solid foundation for your franchise journey.

This approach also positions you to take advantage of growth opportunities. Maybe a competitor closes shop, and you have a chance to expand. Maybe your franchisor rolls out a new initiative, and you want to be first in line to implement it. Having financial flexibility allows you to seize these opportunities.

Wrapping It Up

So, how much money do you need to buy a franchise?

Enough to cover the high end of the investment range and one year of living expenses.

It might sound like a lot. But it is nothing compared to the stress of being underfunded.

Remember, the goal is not just to buy a franchise. The goal is to build a successful one. And that starts with being financially prepared. Plan for the high end of the investment range and add a year of living expenses.

And set yourself up for success.