Trade · 6 pages · 12 min
Why the fee is the product for the franchisor
The franchisor sells the right to use a system, and the fee is that sale.
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From the opening
For the franchisor, the thing being sold is permission to use the brand and the system, plus the ongoing support the contract requires. Royalties, advertising levies, and the initial franchise fee are the price of that permission, which makes the fee itself the franchisor's product. The opening covers royalties price the license, outlet sales belong locally, and fees can rise on thin margins.
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Inside
- Royalties price the license
- Outlet sales belong locally
- Fees can rise on thin margins
- Owned stores are a different line
- Where the idea stops applying
- A distinction worth keeping
Sources
- Franchise royalty on gross sales
- Initial franchise fee