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An Overview of Royalty Fees in Franchising

December 1, 2020

An Overview of Royalty Fees in Franchising

Deciding your overall franchise budget is an important part of evaluating your options, which is why being aware of all of the fees involved is a must. In addition to the franchise fee, legal fees and more that are due up front, there are also ongoing fees to evaluate as you choose the opportunity that is best for you.

In regard to the ongoing fees, the majority of franchises will have royalty fees that are due monthly from franchisees. These royalty fees cover operating costs and more for your franchisor, and provide franchisees with quite a few benefits as well.

A Look at Franchise Royalty Fees

What is the average range for royalty fees? Franchise royalty fees can typically be anywhere from 2 to 12% of overall sales, and the College HUNKS royalty fees come in around the middle at 7%.

What does the royalty fee cover for franchisees? The royalty fee is what allows the franchisor to provide ongoing services and benefits to their franchisees in the field. This includes systems such as continued training, support and advisement, which franchisees are always encouraged to take advantage of as they make their business the best it can be.

How can I make sure a royalty fee is reasonable? While it is impossible to accurately predict your sales volume before you open your franchise, you can learn more from the franchisor in regard to what your projected profits are for your location and figure out what you will owe in royalties from there.

Why should I have to pay royalty fees? If you come across a franchise opportunity that offers no or extremely low royalty fees, that is a sign that you may want to be wary about the investment. Because of the ongoing benefits that a good franchisor will provide, the royalty fee is well worth it to ensure you get the support and attention from your franchisor that will help you succeed.

What about advertising fees? Advertising fees and royalty fees are typically collapsed into one cost conversationally, but they are quite different things. When you franchise with us, the 2% advertising contribution supports our marketing efforts from the national level—these are the things that increase brand awareness, consumer opinion and result in more business for all franchisees in the field.

Are you ready to learn more about the College HUNKS franchising opportunity? Contact us today to get more information.