Royalty Fees

What Royalty Fees Are

Royalty fees are ongoing payments made by franchisees to the franchisor, typically calculated as a percentage of gross sales. These fees fund the continued use of the brand, system support, and sometimes technology or marketing initiatives.

Typical Structure

Most royalty fees fall below 10% of gross sales, but they vary depending on:

• Brand recognition

• Level of support provided

• Included marketing and operational services

Some brands may charge a fixed monthly fee instead of a percentage, particularly in service-based businesses.

Why They Matter

Royalty fees are a key part of the franchise business model. They cover ongoing support like training, field visits, technology platforms, and system updates. Understanding the royalty structure is essential for calculating your expected profitability.

Legal Disclaimer

This information is for general educational purposes only and is not financial or legal advice. Always consult qualified professionals before making franchise-related decisions.