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
What does a franchisee pay a ‘management service fee’ for?
Franchisors generally receive three fees. First an initial fee, which should not contain any profit for the franchisor. This seeks to reimburse the franchisor the cost of granting the franchise. According to recent research, these costs can be very high. Secondly, an advertising/marketing levy of usually about two per cent, which can only be used for marketing purposes, and, thirdly, a management service fee of usually about eight per cent. Sometimes this fee is referred to as a ‘service fee’, ‘continuing fee’ or ‘royalty’. The management service fee aims to reimburse the franchisor the costs in providing the continuing services to the franchisee, which are set out in the franchise agreement. These services will relate to monitoring the performance of the franchisee, continuing research, developing the franchise, organising meetings and so on. The management service fee also contains the franchisor’s profit. Indeed, unless the franchisor requires franchisees to obtain products or services from the franchisor, or its nominated suppliers, and receives a mark up, kick back or rebates from the suppliers, the management service fee is likely to be the franchisor’s only source of profit.
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 The Alley franchise
Yes
Find Out MoreN/A
We're sorry, this franchise is no longer seeking applicants.
Click here to find other Food & Beverage franchisesStart your own The Fruit and Veg Man franchise
Yes
Find Out More£150,000
Request Free Information
Send a free enquiry to The Fruit and Veg Man for further information!
Start your own Dyno-Rod Plumbing franchise
Yes
Find Out MoreN/A
Request Free Information
Send a free enquiry to Dyno-Rod Plumbing for further information!
Start your own CareYourWay franchise
Yes
Find Out More1,000,000
Request Free Information
Send a free enquiry to CareYourWay 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!
Companies to Consider
Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
-
Why does Mail Boxes Ect. work as a franchise business?
Added 6 hours ago | 2 min read
-
Women in business: The advice any new franchisee should know
Added 2 days ago | 2 min read
-
Sales Geek: Behind the B2B franchise trying to start a sales revolution
Added one week 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 -
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
What Franchise Newsletter
Keep up to date with all the industry news