Understanding Franchise Fees and What They Mean
Franchise fees are often one of the most confusing parts of franchise ownership. Many buyers see the numbers but do not fully understand what they pay for, why the fees exist, or how they impact long term performance. Understanding franchise fees is not about memorizing percentages. It is about knowing how the system is funded and how that support shows up in your business. The Initial Franchise Fee The initial franchise fee is paid upfront when you sign a franchise agreement. This fee grants you the right to operate under the brand and access the franchise system. It typically covers training, onboarding, site selection support, and access to proprietary systems. This fee is not an investment that gets returned. It is the cost of entering the system. Understanding what is included helps you evaluate whether the value matches the cost. Ongoing Royalty Fees Royalty fees are usually paid on a regular basis and are often a percentage of gross revenue. These fees fund the on...