Training Expense

✅ Short Definition

Training expense refers to the total out-of-pocket costs that a franchisee incurs to participate in required training programs mandated by the franchisor. These may include travel, lodging, meals, wages, and supplemental training fees. Training expense is typically disclosed in Item 7 of the Franchise Disclosure Document (FDD).

🧾 Long Definition

Training expense in franchising represents the cumulative financial cost associated with attending and completing the training programs that franchisors require of new franchisees and their key staff. These costs go beyond any training fee that might be included in the initial franchise fee and encompass all expenses tied to attending the training—such as airfare, hotel accommodations, meals, lost wages, and additional participant costs. Training is essential to help franchisees learn the systems, procedures, customer service standards, and operational methods that define the franchise brand. Franchise agreements may also require ongoing training after the business launches, with associated training expenses to be paid by the franchisee. A clear understanding of training expense is critical for budgeting and should be reviewed carefully in the FDD’s Item 7 disclosures.

Also see 'Training Cost'

Learn more about franchising in The Educated Franchise - 3rd Edition

🕰️ History and Usage

The concept of  became standardized as franchise systems matured and began offering formal onboarding programs in the 1960s and 1970s. As systems expanded, franchisors required new franchisees to attend centralized or regional training to maintain operational consistency. These programs became more sophisticated—and often longer—as franchise systems added new technologies and compliance requirements. Today, training expenses are common and often necessary for both initial operations and ongoing development, especially as brands evolve or roll out new services. State and federal franchise laws now require these expenses to be clearly disclosed, providing transparency for prospective franchisees.

💼 Typical Items Included in Training Expense

• Travel: Airfare, mileage, or local transportation to training facilities.
• Lodging: Hotel stays for multi-day training events.
• Meals and Incidentals: Daily food and personal expenses during travel.
• Wages: Lost income or staff payroll for time spent in training.
• Additional Trainee Fees: Charges for extra attendees beyond the number included in the base franchise fee.

❓ Five Common Questions About Training Expense

1. Is training expense different from the training fee?
   Yes, training expense refers to out-of-pocket costs, while the training fee may be included in the franchise fee.
2. Who pays for training-related travel and lodging?
   Franchisees are usually responsible for all training-related travel and lodging expenses.
3. Are training expenses tax deductible?
   Often yes, but franchisees should consult a tax advisor for guidance.
4. Does the franchisor reimburse training expenses?
   Usually not, unless otherwise stated in the franchise agreement.
5. Where are training expenses listed in the FDD?
   Training expenses are typically estimated and disclosed in Item 7 of the FDD.

📝 Examples of Common Usage for Training Expense

• 'The estimated training expense for attending the two-week corporate training program was approximately $4,200.'
• 'All training expenses, including airfare and hotel, were paid directly by the franchisee.'
• 'Ongoing training expenses for new service rollouts were the responsibility of each franchise location.'

📌 Summary

Training expense is a critical part of the initial and ongoing cost structure of owning a franchise. While the franchisor typically provides the training itself, franchisees are responsible for many of the associated costs. A thorough understanding of training expense helps ensure accurate budgeting and reduces the risk of unexpected financial strain during startup and beyond.