Franchise Fee, Royalty Fee, License and Marketing Fee – Franchise Agreement Terminology

To negotiate a franchise agreement, the potential franchisee needs to fully understand the terminology used in the franchising industry. Often, new franchisees misunderstand the terms ‘Franchise Fee’, ‘Royalty Fee’, ‘License’ and ‘Marketing Fee’. Once understood, the potential franchisee can better negotiate the agreement and furthermore save a significant amount of money over time. This article is designed to teach the new entrepreneur about these terms and how the fees or rates are structured.

The following sections describe and illustrate the four key terms in a franchise agreement.

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