The franchise business will contact you by means of email and/ or telephone only to the email address and phone number you have provided.
By submitting the enquiry form you are consenting to send your personal information to the selected franchise business.
You also agree to receive further newsletter email marketing from What Franchise.
Are a franchisor’s management service fees always charged as a percentage of gross sales?
It is common for management service fees to be charged as a percentage of turnover. The actual percentage will depend on the nature of the particular franchise, although in many cases the percentage will often be somewhere between 4-10 per cent, with the frequency of payments varying from weekly, monthly, quarterly or, very rarely, annually.In some cases, a franchisor may ask for a guaranteed management service fee, meaning that a franchisee will have to pay the higher of an amount detailed in the franchise agreement and an amount calculated using the relevant percentage of turnover. For example, the greater of £1,000 per month or six per cent of turnover for that month. The franchisee should also consider whether the management service fee includes any other fees that may be payable to the franchisor, such as a contribution towards marketing. The important issue for the franchisee will be whether he or she is happy that the management service fee will not reduce profitability, when taken into consideration with other costs that may be payable in relation to the franchise business, to an extent that the franchise business is an unworkable proposition.
You might also be interested in
Answered by Phil Archer
Phil Archer writes: The Bounce Back and CIBILs loans brought in last spring originally replaced the Enterprise... read more
Answered by John Pratt
John Pratt writes: First, you have to work out who is responsible for the poor performance because... read more
Answered by Louise Harris
Louise Harris writes: In respect of renewal fees, every franchise is different. Prospective franchisees are guided to... read more
Answered by Alan Wilkinson
Alan Wilkinson writes: An experienced franchisor will know what works and what doesn’t work when marketing its... read more
Exciting Franchise Opportunities
Companies to Consider
Profit of £50,000 and increasing thereafter
£120,000 net profit
35% to 40% profit, depending on the business model
Right at Home UK
Jackson Fire & Security
Turnover of £250,000 with gross profit of £95,000
Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
Added 2 years ago | 2 min read
Added 2 days ago | 2 min read
Added 3 days ago | 2 min read
Find your next business opportunity
Search 100s of UK franchises and become your own boss today.
What Franchise Newsletter
Keep up to date with all the industry news