Franchise Fees and Royalties: What are you paying for?

If you are looking into buying a franchise, you know that there are many costs involved, but do you know what those costs are and what they actually pay for?

  • Franchise Fee

Every franchise has a fee, this is the cost of buying the business. The price really varies among industries and companies, but every franchise has one.

  • Royalties

Royalties are on-going costs and also vary among companies. Usually, a royalty is between 2% and 10% of gross sales and may increase or if your gross sales increase.

We know that a franchise is a big investment, but it can do less damage than starting your own business from scratch. These fees can go toward on-going training and support for franchisees, updating technology and computer systems and national/regional marketing efforts. They also pay for the right to use the company’s logo, slogan, etc.…

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