The franchise fee refers to what the prospective franchisee pays to the franchisor in exchange for the right to use the brand and system of the franchisor. The franchise fee is usually a lump sum payment made at the beginning of a relationship. There are also ongoing fees for franchises.
By contract, when you purchase a Franchise Opportunity you acquire valuable rights. You also have responsibilities. You must operate the business in accordance with the operating manual and franchise agreement. The franchisor must be paid all fees. It is important that you understand all the fees.
What is a franchise fee?
A franchise fee is any amount of money paid by the franchisee to the franchisor for the right to run a franchise.
Usually, the term “franchise fees” refers to the first fee. In the United States, franchising requirements are governed by the Federal Trade Commission. This is called “the initial fee” under the FTC franchise rule.
Royalties and marketing/advertising fees are also common fees.
