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.
What does the term ‘royalties’ relate to in the franchise agreement?
A franchisee will have to pay a number of fees to the franchisor throughout the term of the franchise agreement. These payments are sometimes generically referred to as ‘royalties’ and can include periodic ongoing fees and advertising fees. However, the term royalty is often more commonly used to refer to the ongoing periodic fee that is payable by the franchisee to the franchisor for the continuing use of the franchisor’s trademarks and know-how, to cover the cost of the franchisor’s updating and development of the franchise concept, and for some ongoing assistance with the franchise system (although some assistance from the franchisor will often be subject to a further fee). This royalty payment may also be referred to as a ‘service fee’ or ‘management fee’ in some franchise agreements. The amount of any royalty payment is usually calculated as a percentage of the franchisee’s gross sales and, in most circumstances, will be somewhere between two and 10 per cent. However, a franchisee must bear in mind that the royalty may not be the only payments it has to make to the franchisor. For example, an initial fee or deposit may be payable on or before signing a franchise agreement and it is common for a separate advertising fee to be payable, which again is usually calculated as a percentage of gross sales.
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
Not Just Travel
60% bank funding, subject to status
£14,000 per week
Multi-unit opportunities available
Get Ahead VA
Assuming you have grown a team to support your clients potential for revenue: £50k, plus
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 about 2 days ago | 2 min read
Added about 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