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.
As A Franchisee, What Ongoing Fees Must I Pay To My Franchisor?
In order to finance the continuing services and back-up provided to franchisees, the franchisor has to secure a regular flow of income. This is normally achieved by charging management service fees or royalties on continuing fees.
In the case of a product distribution franchise, there may also be a mark-up on the supply of products and in most franchises an additional advertising contribution.
Most franchisors charge a straight percentage fee based on the gross revenues of the franchisee. Higher fees can be payable where franchisors carry out administrative functions for franchisees such as invoicing customers, collecting payments and debt collection or where the franchisor finds customers for the franchisee.
Although not so common, some franchisors establish a fixed fee or require payment of a minimal level of fees. Fixed fees can benefit a franchisee if their level is not too high. Adjustments may need to be made at regular intervals to take into account inflation or to reflect growth.
In most cases, the franchisor will undertake responsibility for advertising, promotion and public relations for the network. It’s the franchisor’s obligation to develop and maintain the reputation of the brand and many franchisors set up a central advertising and marketing fund to exploit the national corporate image of the franchise network.
The franchisor will make a charge to each of its franchisees of a sum usually calculated as a percentage of the franchisee’s gross income, which is paid into the advertising and marketing fund. The sum of all these contributions is spent by the franchisor on advertising and marketing on behalf of the network.
Shelley Nadler is a legal director in Bird & Bird’s international franchising team and has many years’ experience of advising on all aspects of franchising.
You might also be interested in
Answered by Vincent Anthony
Vincent Anthony writes: The property market has wide appeal because it is relevant to everyone: we all... read more
Answered by Louise Harris
Louise Harris writes: Richness or wealth is relative. We always want more, I guess. So, what is... read more
Answered by Shelley Nadler
Shelley Nadler writes: A concern that businesses may have when deciding to franchise their business, is the... read more
Answered by Alan Wilkinson
Alan Wilkinson writes: There are two elements to consider here. First is the franchise fee itself, and... read more
Exciting Franchise Opportunities
Companies to Consider
Pasta Dreams by Jamie Oliver
Taster-funded marketing and training costs
Potential ROI within 12 months, with average profits of 34% in the first year
Time For You
Operational breakeven in the first month of trading and return on capital investment from approx.18 months
Fixed sites can earn up to £16,000 per month with profit margins of 65%
Joint ventures with franchisor
£600,000 to £800,000
Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
Added 3 years ago | 2 min read
Added one day ago | 2 min read
Added 4 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