Royalty Rate
An ongoing fee paid by franchisees to franchisors, typically 4-8% of gross sales, in exchange for the right to operate under the brand and receive ongoing support.
Related Terms
Franchise Fee
A one-time upfront payment made by a franchisee to the franchisor to obtain the rights to open a franchise location, typically ranging from $25,000 to $50,000.
Marketing Fund
A cooperative advertising fund where franchisees contribute a percentage of sales (typically 1-4%) for system-wide marketing campaigns managed by the franchisor.
FDD
Franchise Disclosure Document - a legal document that franchisors must provide to prospective franchisees at least 14 days before signing any agreement, containing 23 items of disclosure including fees, obligations, and financial performance representations.
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