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.
Close
How does a franchisor make money from its franchisee network?
In a nutshell, franchisors make money by having successful franchisees. Franchisors should not make money from their network by charging a high initial fee with a large profit element. The purpose of the initial fee is to reimburse the franchisor the substantial cost of recruiting and training franchisees, providing the initial obligations to enable a franchisee to set up in business and to reimburse the high amount of involvement a franchisor has in a franchisee’s business at the beginning of the relationship. If a franchisor charges a substantial profit element in the initial fee, there is a danger the franchisor will want to take on franchisees whether or not it believes they are capable of operating successfully, simply in order to receive the initial fee containing the upfront profit element. Further, franchisors should not make hidden profits - every income stream for a franchisor must be transparent. Where this is often an issue is where franchisees are required to purchase products from a franchisor or the franchisor’s nominated suppliers. In such circumstances, franchisors can charge a mark-up and/or receive commissions or discounts from suppliers, which are then not passed onto franchisees. The British Franchise Association has issued a technical bulletin on this indicating the practice is not wrong, provided the franchisor is entirely up front about it. Where franchisors should earn a profit is in the management service fee, which is usually a percentage of a franchisee’s turnover. The average in the UK is approximately 8.5 per cent. That fee reimburses the franchisor for the assistance it provides franchisees and should also contain a profit element.
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

Start your own Chop & Wok franchise
Yes
Find Out MoreProfit between 27 to 33% of turnover

Request Free Information
Send a free enquiry to Chop & Wok for further information!

Start your own Amigos Burgers and Shakes franchise
Yes
Find Out More£480,000 - £1m (from 14% profit)

Request Free Information
Send a free enquiry to Amigos Burgers and Shakes for further information!

Start your own Post & Packing franchise
Yes
Find Out More£265,000

Request Free Information
Send a free enquiry to Post & Packing for further information!
Start your own Platinum Property Partners franchise
Yes
Find Out More£50,000 to £150,000
Request Free Information
Send a free enquiry to Platinum Property Partners for further information!

Start your own thexton armstrong franchise
Yes
Find Out MoreN/A

Request Free Information
Send a free enquiry to thexton armstrong for further information!
Companies to Consider

Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
-
50 franchise brands with training programmes in 2025
Added 4 months ago | 2 min read
-
Franchise funding: How to beat the banks
Added 3 days ago | 2 min read
-
Franchise agreements: How to navigate territory rights
Added 3 weeks ago | 2 min read
Franchises by Minimum Investment
Find your next business opportunity
Search 100s of UK franchises and become your own boss today.
-
Under 10k
Starting a franchise doesn't have to be costly
Click here -
Under 20k
A mid-range investment for the more experienced
Click here -
Under 50k
If you have experience and more to invest
Click here -
Over 50k
If budget is not an issue, then don't miss these
Click here -
Local Franchises
Find the perfect franchise in a location to suit you
Click here
COPYRIGHT © 2025 ARTICHOKE MEDIA LTD Registered in England and Wales No 14769147 Registered Office Address: Jubilee House, 92 Lincoln Road, Peterborough, PE1 2SN
With the publication of Getting Started in Franchising, What-Franchise.com is not offering legal, financial or any other professional advice or endorsements. Readers are encouraged to seek advice from professionals in specialised fields before acting on any information published herein. The views and opinions expressed in Getting Started in Franchising are those of the author(s) and do not necessarily reflect the views and opinions of What-Franchise.com members or staff.
What Franchise Newsletter
Keep up to date with all the industry news