Franchise vs Independent Business Calculator
Net profit is before owner's wage and tax. A franchise's brand pull often justifies higher revenue — reflect that in the figures.
Why use this tool?
A franchise gives you a proven system and brand pull — often meaning higher, faster revenue — but you pay royalty and marketing fees for it. An independent business keeps those fees but usually ramps slower and carries more risk. The only honest way to compare is side by side on your own numbers. This tool puts both models next to each other and deducts the franchise fees so you see the real trade-off.
Who uses the Franchise vs Independent Calculator?
- First-time business buyers — deciding whether the franchise premium is worth paying.
- Independent operators — weighing up converting to, or buying, a franchise brand.
- Accountants & advisers — showing a client the profit gap between the two models.
- Career-changers — choosing between a turnkey franchise and building something themselves.
How to use it
Compare the two models in three steps:
- Enter the franchise scenario. Add the franchise's investment, expected annual revenue, gross margin, fixed costs, and the royalty and marketing percentages.
- Enter the independent scenario. Add your own business's investment, a realistic (often lower or slower) revenue, gross margin and fixed costs — with no franchise fees.
- Compare net profit and ROI. The tool shows each model's net profit and ROI, and which is ahead. Try a lower independent revenue to reflect the brand's head start.
Frequently asked questions
Is it better to buy a franchise or start your own business?
It depends on your appetite for risk and the value of the brand. A franchise typically reaches profitability faster with lower failure risk but pays 5–12% of sales in fees; an independent keeps those fees but must build brand, systems and demand from scratch. Model both above with your own numbers.
How much do franchise fees reduce profit?
Royalty and marketing levies together commonly run 7–12% of gross sales. On $600,000 of revenue that's roughly $42,000–$72,000 a year. The franchise has to generate at least that much extra profit (via higher sales or lower costs) to beat going independent.
Do franchises make more money than independent businesses?
Not automatically. Franchises tend to have higher survival rates and faster ramp-up, but after fees a well-run independent can out-earn a franchise. The deciding factors are how much extra revenue the brand drives and how disciplined the operator is.
What costs are unique to a franchise?
The initial franchise fee, ongoing royalty, a marketing/brand-fund levy, and sometimes fees for training, technology, renewals and transfers. Independents avoid these but spend more on building their own brand and marketing.
Is this comparison tool free?
Yes — free, in-browser, no sign-up. It's a planning estimate; validate franchise revenue with current franchisees and get independent professional advice before deciding.