Understanding Franchise Fees, Royalties, and Other Ongoing Costs

When you buy a franchise, the initial investment is just the beginning. Ongoing fees are part of the business model—and they fund the support and resources you receive.

Royalty Fees

Usually a percentage of your gross sales (often 4–8%), royalties fund the franchisor’s ongoing support, system improvements, and operational assistance.

Marketing/Advertising Fees

These contribute to national or regional campaigns that boost brand recognition. Ask what portion goes to local marketing and how campaigns are tracked for ROI.

Technology Fees

Many franchises charge for software licenses, POS systems, or tech support.

Renewal Fees

When your agreement term ends (often 5–10 years), you may pay a renewal fee to continue operating.

Miscellaneous Costs

Training refreshers, conference attendance, and product development fees can be small individually but add up over time.

Takeaway: Ongoing fees should be matched by ongoing value. If you don’t see a clear benefit, dig deeper before committing."

Have questions about franchise ownership OR franchising your existing business? Please feel free to reach out to me at JoeFox@TheFranchiseConsultingCompany.com or (713) 936-4929. I am a Senior Franchise Consultant with over 30 years of business experience. My services are free and I'm here to help.