Costa Oil Franchise Costs, Fees & Owner Salary (2023)

Initial Franchise Fee

The Initial Franchise Fee for a Costa Oil franchise is a significant one-time payment of $54,900. This fee is an upfront investment by the franchisee, typically paid via cashier's check or wire transfer. It's a standard fee in franchising, granting the franchisee the right to use the Costa Oil brand and access initial franchisor support. This fee is crucial for entering into the franchise agreement, and facilitating the startup of the franchise under the established Costa Oil brand.

Royalty Fee

The Royalty Fee is a recurring obligation in the Costa Oil franchise model, set at 6.5% of Gross Revenue with a minimum weekly royalty of $150. This ongoing fee is a percentage of the franchise's gross income paid to the franchisor. Royalty fees are common in franchise agreements, reflecting the continuous use of the brand and franchisor support. The structure of this fee aligns the interests of the franchisor with the franchisee's success, as it is directly tied to the franchise's revenue.

Advertising Fee

In addition to the Royalty Fee, Costa Oil franchisees are required to contribute 2% of their Gross Revenue to a Brand Fund for advertising, paid every week. This fee is pooled for collective marketing and promotional activities that benefit the entire franchise network. Such a system ensures consistent and effective brand promotion, enhancing visibility and competitive advantage in the market.

The collective marketing approach allows for more impactful advertising than what individual franchisees might achieve on their own.

Lease or Rent Fee

For franchisees who opt to lease their business premises from Costa Oil, the Lease or Rent Fee applies. This fee pertains to leasing a prefabricated structure, known as a Kiosk.

The estimated initial costs for leasing a Kiosk range from $6,000 to $10,000, depending on factors like construction, delivery, and installation. This fee represents a significant part of the initial investment for franchisees who choose this leasing option, offering a streamlined start to their franchise operation with a ready-to-use business location.

Supplier Review Fee

Costs vary depending on several factors like the availability of product samples, shipping, travel costs, and the type of product under review. Estimated between $500 to $5,000, payable upon demand.

Costa Oil provides new franchisees with a comprehensive program covering various aspects essential to operating a franchise. Here are the key components of the training program:

1. New Franchisee Training: This training is mandatory for the franchisee, their principal Operator, and any general manager. Up to three individuals per franchise are allowed to attend. The training ensures that the key personnel are well-equipped with the necessary skills and knowledge for managing the franchise efficiently.
2. Training Program Structure: The program is comprehensive, including both classroom and on-the-job training. Conducted at the corporate headquarters and potentially via virtual sessions, it covers a wide range of topics crucial for running the franchise. These topics include an introduction to Costa Oil, software/POS training, management strategies, marketing, customer satisfaction, bookkeeping, key performance indicators, hiring and recruiting, employee scheduling, labor management, and risk management and compliance.
3. On-Site Opening Assistance: Costa Oil offers additional on-site opening training and assistance, contingent upon the payment of a Grand Opening Onsite Support Fee. This service provides hands-on support during the initial stages of the franchise's operation, aiding in a smooth start.

Costa Oil offers territory protection for its franchisees. Each franchisee is granted an exclusive Marketing Area, where the franchisor agrees not to establish any other company-owned or franchised outlets that sell similar goods or services. 

This exclusive territory is typically defined by a population of about 50,000 people or spans a three-mile radius, with specific boundaries based on geographical or political markers. The exclusivity of a franchisee's territory is not contingent on sales volume or market penetration, ensuring secure operational space without direct competition from other Costa Oil outlets.

Costa Oil's franchise system does not support a purely passive investment model. Franchisees are expected to actively participate in their business's operation.

While day-to-day management can be delegated to a designated and trained Principal Operator, the franchisee must maintain significant involvement in the business, precluding a completely passive investment approach.