08 Sep, 2017

Franchise Royalty Fees

Are you a franchisor and you need to open a franchise or you are already in a franchise? There are some very important things you really need to consider. One of them is the franchise royalty fee. The simple definition of the fee says that it is the amount of money that is paid by the franchisee to the franchisor. For the franchisee to continue using a piece of work, he or she will have to make some payment to the original owner of the work. An author has a right to such a fee from the individual using his or her work for one purpose or the other. It can be considered as an offence on the part of the franchisee if the said amount of money is not paid. How often is it paid? The franchise royalty fee is expected to be paid periodically. It can be paid once in a year or once in a month. There are some other ones that may be arranged to be paid once in a quarter. The first payment made is almost always the highest. Any other one that is paid after that is never up to the initial payment. Effect of the fee Franchise royalty fees can be used for a number of things by the franchisor. The amount of money received makes it possible for him to improve on the work that is being utilized. The improvement will enable him to bring up something more current for the consumption of the general public. The franchisor will also have to make some bill settlements. He wil have to pay for rents, compensation and wages of his staff member. He wil also have to maintain his office and its operations. With the franchise royalty fees, the franchisor also has the capability to bring an extension into his business. He may want to extend his business to other parts of the country or even to other parts of the world. With the aid of the amount received, any improvement or extension achieved by the franchisor will go a long way to determine how properly set the franchisee will be in business. Conclusion The franchise royalty fees are paid based on agreement between the franchisee and the franchisor. The range is almost always between five to eight percent of the total sales made by the franchisee. The monthly period of payment is the most common in this regard.