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 Louise Harris
Louise Harris writes: There are several types of assistance for funding a franchise if you need to... read more
Is it a good sign when a franchisor has a mix of company owned and franchised outlets in its network?
Answered by Shelley Nadler
Shelley Nadler writes: Some extremely successful franchise brands have both franchised and company owned outlets. There are advantages... read more
Answered by John Pratt
John Pratt Writes: In the UK, there are no legal restrictions on anyone becoming a franchisor, but... read more
Answered by Alan Wilkinson
Alan Wilkinson writes: I’m often asked to define franchising and this is a good place to start... read more
Exciting Franchise Opportunities
Companies to Consider
The Spitting Pig Co
40% net profit on a turnover of £110,000
Guardian Angel Carers
35% to 40% profit, depending on the business model
Potential ROI within 18 months with an average net profit of 21%
Mr Simms Olde Sweet Shoppe
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 5 hours 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