What is the definition of Royalty Fee?
The word royalty fee refers to the monthly re-occurring charge a franchisee pays to the franchisor. The fee is usually a in the Franchise Agreement decided upon percentage of the earnings. Normally this ranges from between five and nine percent. This charge is usually oriented towards allowing the franchise healthy enough profit, after all expenses, thereby allowing the business to do well both at first and ongoing.
In addition to the re-occurring royalty fee, franchisees also give an early payment or early franchise fee. This fee varies very much from franchise to franchise – but is usually agreed upon in the franchise accord.