Initial franchise fee
What it means
This fee buys entry to the system rather than the physical business. It typically covers the grant of the franchise, the right to use the brand and intellectual property, initial training, and the franchisor's costs in bringing a new franchisee on board.
The initial franchise fee is only one part of what it costs to get open. It sits alongside the fit-out, equipment, initial stock, and working capital that together make up the total investment, so a modest joining fee does not mean a cheap start.
The amount and what it covers must be disclosed in the disclosure document under the Franchising Code of Conduct 2025. Any amount you pay during the 14-day consideration period before signing must be refunded within 14 days if you ask in writing, and a new agreement carries a 14-day cooling-off period after you enter into it.
In practice
Read closely what the initial fee does and does not include. In some systems it bundles initial training and equipment; in others those are charged separately, which changes the true cost of opening.
Because the fee is paid before you trade, it is capital at risk from day one. The Code's cooling-off period lets you exit within the window and recover payments, less the franchisor's reasonable expenses if the agreement sets them out.
A real example
A new franchisee pays a $45,000 initial franchise fee to join a retail network, which covers the licence grant and a two-week training program. Fit-out, equipment, stock and working capital are all extra, so while the joining fee is $45,000, the total investment to open the store is closer to $350,000.
Initial franchise fee, FAQs
Is the initial franchise fee refundable?
If you paid it during the 14-day consideration period before signing, the franchisor must refund it within 14 days of a written request. After you enter into a new agreement, you can recover it by exercising your 14-day cooling-off right, less any reasonable expenses the agreement sets out. Outside those windows it is generally non-refundable.
Does the initial fee cover fit-out and equipment?
Usually not. It typically covers the licence and initial training; fit-out, equipment, stock and working capital are separate and often far larger.
Is the fee the same across a network?
Franchisors commonly set a standard initial fee, though it can vary by territory, format or site. The applicable amount must be disclosed to you before you sign.
How is it different from ongoing fees?
The initial franchise fee is a one-off upfront payment to join; ongoing fees such as royalties and the marketing levy recur throughout the term as you trade.
See the full franchise glossary, the Fee Index or our buyer guides.