royaltiesAs a franchise owner, you are familiar with the franchise royalty fee and why it’s collected. For those of you that are new to franchising, let me explain the franchise ROYALTY FEE.

The royalty fee is sometimes referred to as the monthly management service fee, and is collected by the franchisor from the franchisee. The royalty fee is important to both the “zor” and the “zee”.

Franchisors devote an incredible amount of time and resources to “package” their business to encompass business best-practices, ability to startup seamlessly, and include all necessary operational components for success. Franchisees reap the benefits through adequate training, vetted technology systems and platforms, clearly defined operations processes, strong brand recognition, vendor partners, and ongoing support.

Franchising businesses have the highest success rate of any other business model because the development process has been tried, proven and ready for you. Ongoing engagement from your franchisor is essential to your long-term success. Training and follow-up are key and should be provided in varying formats – conferences; collaboration platforms; regularly scheduled sales, marketing, and operations calls; territory development; and sometimes, leadership coaching. There are many more, but these are most common.

Royalty fees are designed to compensate the franchisor for their efforts in packaging your new business, and to ensure you have the necessary support, most efficient processes and systems at your disposal.

Note, not all franchises are created equal. Due diligence is always required! Understand all components of the franchise in which you are looking to invest – this is your investment. Ensure that your royalty fee agreement is straight forward and always read the fine print. These surprises tend be unwelcomed and costly.

The system is there to support and protect you, the investor. Use it; love it; be successful.

“Do not wait to strike till the iron is hot; but make it hot by striking.” – William Butler Yeats