What franchisees pay.
WHAT FEES TYPICALLY APPLY
An initial fee Ongoing fees, usually a proportion of revenue Marketing contributions Charges for supplies, where you supply Renewal and transfer fees
WHAT THE INITIAL FEE COVERS
The right to operate Training Setup support Documentation
WHAT IT SHOULD NOT BE
Your profit on the transaction.
WHY
A fee set to extract value rather than cover cost produces franchisees who cannot succeed.
WHAT ONGOING FEES COMPENSATE
Continuing support, brand development and system improvement.
WHAT TO ESTABLISH
A rate the franchisee's economics can sustain.
HOW TO ESTABLISH IT
Model franchisee profitability at realistic revenue.
WHY REALISTIC
Models built on optimistic revenue produce failing franchisees.
WHAT TO CHECK
That the franchisee earns an acceptable return after all fees and their own work.
WHAT MARKETING CONTRIBUTIONS ARE FOR
Collective marketing benefiting all franchisees.
WHAT TO ESTABLISH
That they are used for that, and accounted for.
WHY
Misuse of marketing funds is a frequent source of disputes.
WHAT TO PROVIDE
Accounting for how contributions were spent.
WHAT TO BE CAREFUL WITH
Requiring purchase of supplies from you at inflated prices.
WHY
It is resented, it is detected, and it undermines the relationship.
WHAT TO ESTABLISH
That supply arrangements are justified by quality or price.
WHAT TO AVOID
Fee structures that depend on continuous recruitment of new franchisees.
