{"id":45156,"date":"2023-10-16T11:42:33","date_gmt":"2023-10-16T15:42:33","guid":{"rendered":"https:\/\/www.thefranchiseking.com\/?p=45156"},"modified":"2024-12-14T14:25:18","modified_gmt":"2024-12-14T19:25:18","slug":"franchise-royalties","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/franchise-royalties","title":{"rendered":"Royalty Fees: “I Love Paying $33,600 A Year In Franchise Royalties!” (Said No One Ever)"},"content":{"rendered":"\n
\"a<\/figure>\n\n\n\n

Conversations about franchise royalties<\/strong> generally fall into 5 clear-cut categories.<\/p>\n\n\n\n

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  1. “Why do I need to pay royalty<\/strong><\/em> fees<\/strong>? What are they for<\/em>?”<\/li>\n\n\n\n
  2. “I’m not sure if I want to pay them<\/em>.”<\/li>\n\n\n\n
  3. “Paying franchise royalty fees<\/a> are just part of owning a franchise<\/em>.”<\/li>\n\n\n\n
  4. “These franchise royalties are too high<\/em>.”<\/li>\n\n\n\n
  5. “I’m sick of paying royalties!<\/em>“<\/li>\n<\/ol>\n\n\n\n

    Maybe if you knew more about franchise royalties…<\/p>\n\n\n\n

    What Are Franchise Royalties?<\/h2>\n\n\n\n

    In a nutshell, royalty fees are paid by franchisees to the franchisor…for services rendered<\/p>\n\n\n\n

    In most cases, franchise royalties are paid on a monthly basis. And the amount is normally based on a percentage of sales. <\/p>\n\n\n\n

    For example, if your franchise business<\/a> has a $40,000 month (in sales<\/em>), and your franchise agreement states that your royalty fee is 7%, you’d owe your franchisor $2800 for that month. <\/p>\n\n\n\n

    Subsequently, if you had a year in which your franchise business did $40,000 in sales every month, you’d owe a total $33,600 <\/strong>on franchise royalties. Because $2800 X 12 months = $33,600. Got it? That’s a lot of money!<\/p>\n\n\n\n

    Unless you’re getting a nice return on those royalty fees. <\/p>\n\n\n\n

    What Does Paying Franchise Royalty Fees Get You?<\/h2>\n\n\n\n

    Franchisees pay royalties every month in exchange for a wide range of benefits and support. These are the things that help them establish and operate a successful franchise business. Some of these benefits include:<\/p>\n\n\n\n