Item 6 - OTHER FEES
This section outlines other ongoing fees, such as the royalty, training fees, technology fees, marketing fees, renewal fees, and any other fee required by the franchisor. It includes payments made directly to the franchisor or an affiliate or collected by the franchisor or affiliate for the benefit of a third party. It does not include payments made directly by a franchisee to third parties, such as payments for rent, telephone, utility or internet services.
- Estimate your monthly finances as a franchisee, considering any foreseeable fee expenses.
- The national and local advertising fees should be balanced, preferably at ~2% each. This emphasizes outlet performance, without sacrificing overall brand development on the national scale.
- Typically, a franchise that has low royalty rates will stipulate more stringent restrictions on product sourcing (Item 8).
- Are the fees reasonable, compared to similar franchise systems?
- Do the fees make sense economically? For example, are the fees so high that it would be difficult for you to be profitable as a franchisee?
- Look for unusual fees like liquidated damages for early termination.