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What is the normal royalty and up-front fee when buying a franchise?

Sal Bonilla

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Answers (5)
Jon Holmquist
Edgemaster Model 400 sharpener
President
Marion County, OR

Hey Sal and anyone else interested in a special holiday DEAL!
In the interest of helping Veterans get started we are offering a limited deal of extremely low franchise fee. We have had several inquiries from Vets and feel it is only fair to them to give them all the help we can but of course we have to limit the offering to stay in business. Check us out! Jon at EMS.

Dec 7, 2010
Jon Holmquist
Edgemaster Model 400 sharpener
President
Marion County, OR

Hello Sal, if you are hung up on the fee, look at one with a fixed royalty. Guess what, our is fixed so you don't have to worry about out earning the fee. We are unusual as we do a lot of cash sales and to get into a percentage of cash sales to a mobile business is folly. Just to let you know that there are many ways of setting up a franchise. Look at several and choose wisely. Jon at Edgemaster

Sep 24, 2009
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Franchise Advisory Group
PA

Sal, Please read my blog about the subject.
http://franchiseadvisorygroup.net/blog/view/105/paying_royalties_might_be_the_best_money_spent_in_your_business

Since I represent hundreds of Franchises, I can tell you that Franchise fees are $20K-$50K and royalties are between 5%-10%

Apr 4, 2009
Rob Goggins
Great Clips, Inc.
Vice President of Franchise Development
Carver County, MN

Eric's answer is right on target. Take a hard look at whether or not you're a good fit for the franchise and your expected ROI. Be sure to talk with existing franchisees and ask them whether or not they feel they're getting fair value for their royalty. It's rare that a franchisee will "enjoy" submitting royalty checks to the franchisor, but they should be receiving fair value for the royalties. I've talked with franchisors that charge close to 20% royalties, but they provide so much in value (monthly accounting services, customer invoicing/collection, outstanding software and updates, sales services, etc.) that the franchisee was very willing to pay the 20% so they could focus on other core aspects of the business. And it still delivered a healthy bottom line to the franchisee. Best of luck to you Sal.

Mar 25, 2009
Eric Little
Right at Home, Inc.
SVP
Douglas County, NE

Hi Sal. I guess that all depends on what your definition of "normal" is :). For my industry (senior care), most franchise fees are around $30,000 - 35,000 and royalties average around 5%. But, franchise fees and royalties will vary by industry and business model. I wouldn't get too hung up on the fee and royalty amounts, unless there is a huge difference between the franchise you are considering and others in the same industry. If there is a big dfference, take the time to understand why. Bottom line: look at the entire investment relative to the money you can make, not just the amount of the franchise fees and royalties.

Mar 24, 2009

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