Franchising is a common option for people who want to venture into a business. The drive and enthusiasm of the entrepreneur, plus the experience and expertise of the franchisor make the perfect combination for achieving financial success.
Investing in a franchise will typically require you to pay an upfront franchise fee and periodic royalty fees to the franchisor over the life of the franchise agreement. While the franchise fee is paid at the start of the franchise agreement, royalty fees are ongoing fees that are integral to the franchising system and help to ensure that ongoing support is received.
Royalty fees cover the ongoing use of the name and system, including administrative costs. While it is usually paid monthly, what you really need to know is the difference between fixed and percentage royalty fees.
To help you gain further understanding about these two types of payments, we’ve expained detail the truth about fixed vs. percentage royalty fees: