Franchise Cost Changes 2025 to 2026
Construction and real estate pushed total investment up 8%. Franchise fees crept 5%. Royalties held flat. Subway actually cut its fee. Here's the full year-over-year breakdown.
Last updated: March 2026 • Sources: FDD (Franchise Disclosure Document) filings, IFA Franchise Business Outlook, IBISWorld Franchise Industry Reports
2025 vs 2026: Franchise Cost Comparison
Franchise fees and estimated total initial investment from FDD Item 7 disclosures.
| Franchise | 2025 Total | 2026 Total | Change |
|---|---|---|---|
| McDonald's | $1.2M–$2.2M | $1.3M–$2.3M | ▲ +8% |
| Chick-fil-A | $343K–$2.2M | $343K–$2.2M | — 0% |
| Dunkin' | $500K–$1.7M | $527K–$1.8M | ▲ +7% |
| Subway | $229K–$522K | $216K–$508K | ▼ -4% |
| Wingstop | $389K–$783K | $414K–$827K | ▲ +6% |
| Planet Fitness | $1.1M–$4.5M | $1.1M–$4.5M | — 0% |
| Orangetheory Fitness | $560K–$1.0M | $617K–$1.1M | ▲ +10% |
| Servpro | $191K–$280K | $191K–$280K | — 0% |
| The UPS Store | $177K–$403K | $185K–$418K | ▲ +4% |
| Great Clips | $136K–$259K | $140K–$267K | ▲ +3% |
| Jan-Pro Cleaning | $4K–$56K | $4K–$56K | — 0% |
| Kumon | $73K–$155K | $76K–$160K | ▲ +4% |
Where the Money Goes: Fee vs Total Investment
Franchise fee is just the entry ticket. Real estate, buildout, and equipment are 80–90% of total cost.
| Cost Component | 2025 Avg | 2026 Avg | Change |
|---|---|---|---|
| Franchise fee | $35,000 | $37,000 | ▲ +5% |
| Real estate / lease deposit | $85,000 | $93,000 | ▲ +9% |
| Construction / buildout | $120,000 | $135,000 | ▲ +12% |
| Equipment & fixtures | $65,000 | $68,000 | ▲ +5% |
| Initial inventory | $12,000 | $12,500 | ▲ +4% |
| Marketing (grand opening) | $10,000 | $10,000 | — 0% |
| Working capital (3 months) | $45,000 | $48,000 | ▲ +7% |
| Ongoing royalty rate | 5.5% | 5.5% | — 0% |
| Ad fund contribution | 2.5% | 2.5% | — 0% |
Construction Costs: The Real Driver
Construction and buildout costs jumped 12% — the largest increase of any franchise cost component. Commercial construction material prices (steel, concrete, lumber) rose 8–15% nationally. Labor costs for commercial contractors increased 6–10% depending on the market.
This hit restaurant franchises hardest because they require the most buildout — kitchen equipment, exhaust systems, plumbing, and interior finishes. A McDonald's buildout that cost $1M in 2025 runs $1.1M+ in 2026. Service franchises (cleaning, home repair, tutoring) barely felt it because they need minimal buildout — often just a van and equipment.
The Bright Spots: Where Costs Fell
Subway cut its franchise fee from $15,000 to $12,500 and relaxed buildout requirements for new stores. Total investment dropped 4%. It's part of a broader strategy to reverse store closures — Subway closed 1,700+ U.S. locations between 2022 and 2025.
Several cleaning and janitorial franchises reduced upfront costs too. Jani-King, Vanguard, and Jan-Pro all held fees flat or cut them slightly. The cleaning franchise sector is trying to compete with solo operators who can start a cleaning business for under $5,000 with no franchise affiliation.
Royalty Rates: The Cost That Didn't Change
No major franchise brand changed its royalty rate in 2026. McDonald's stayed at 4% + 4% ad fund. Dunkin' held at 5.9% + 5%. Subway kept 8% + 4.5%. Planet Fitness held at 7%. Chick-fil-A's unusual model (no royalty, corporate-owned stores) didn't change.
This matters because royalty rates compound over the life of a franchise — a 1% royalty increase on $1M annual revenue costs $10,000/year forever. Brands know that raising royalties triggers franchisee backlash, so they increase other fees (technology fees, required renovations) instead. Watch for "technology fee" increases in 2027 FDDs.
Common Questions
What's the cheapest franchise to open in 2026?
Jan-Pro commercial cleaning: $4,000–$56,000 total investment. Vanguard Cleaning: $6,000–$36,000. Jani-King: $8,000–$16,000. These are van-and-equipment businesses with minimal overhead. On the food side, Subway is the cheapest major restaurant franchise at $216K–$508K.
Why did Chick-fil-A costs stay the same?
Because Chick-fil-A owns the real estate and builds the restaurants. Franchisees pay a $10,000 franchise fee and that's it — no construction costs, no equipment purchases, no lease deposits. Chick-fil-A bears the real estate risk. The tradeoff: they keep the real estate and equipment if you leave, and they take a larger cut of profits. It's a fundamentally different model than other franchises.
Will franchise costs keep going up in 2027?
Probably. Construction costs aren't expected to drop until interest rates fall significantly — and even then, the labor shortage in commercial construction will keep costs elevated. Franchise fees will likely creep 3–5% for most brands. The best hedge: look at service franchises and home-based business models where the investment isn't tied to commercial construction.
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Data Sources
Franchise fees and investment ranges: FDD (Franchise Disclosure Document) Item 5 and Item 7 filings, publicly available via state franchise registration offices. Revenue estimates: FDD Item 19 Financial Performance Representations where disclosed. Industry trends: International Franchise Association (IFA) Franchise Business Outlook 2026, IBISWorld Franchise Industry Reports. Construction costs: RSMeans Commercial Construction Cost Data 2026.
Data: Franchise Disclosure Documents (FDDs), SBA Franchise Loan Data, FRANdata Industry Benchmarks, IFA Economic Reports
Last updated: March 2025
How we calculate this · FDD Item 19 data, where shown, is historical. Past unit performance does not predict your results. Read the full FDD before signing.