Franchise Fee

The franchise fee is typically a one-time upfront dollar amount to begin the process of the relationship. Often the franchisor is trying to recoup the initial cost outlays to establish the franchise system. For the franchisee, this franchise fee is an expensive outlay that will take years to recover. Often this upfront fee is in the tens of thousands of dollars.

Franchise Agreement Costs – How Much Does it Really Cost to be a Franchisee?

Franchise Costs

The primary reason for the franchise arrangement is the increased net profit for the franchisee in using the franchiser’s name, logo, brand, or trademark.  The franchiser charges an upfront fee called a Franchise Fee, monthly Royalties, in some agreements a License Fee and Marketing/Advertising minimums.  These additional costs to the franchisee are paid to use the franchiser’s name. 

The Franchise Relationship

Business Trusts

A franchise relationship is a partnership between two parties.  The primary party is the Franchiser.  This entity owns a master group of similar business selling/providing the same product or service.  The Franchiser sells a ‘Right’ to his name and his conditions in exchange for a royalty fee.  The second party is the Franchisee.

Introduction to Franchises

Franchises

Simply put, Franchising is a partnership relationship.  As a small business owner, you have to decide if you truly want to be in a relationship with an authority in your business operation.  This can be a mutually beneficial arrangement or a nightmare from day one.

Follow by Email
Facebook
Twitter
LinkedIn