Franchise Glossary
Royalty
What is Royalty in franchising?
An ongoing fee paid by the franchisee to the franchisor, typically 4%–8% of gross revenue paid weekly or monthly, in exchange for continued use of the brand, systems, and support infrastructure. Royalties are defined in FDD Item 6 and continue for the full term of the franchise agreement. The royalty rate, combined with the marketing fund contribution, represents the franchisee's total ongoing cost of brand affiliation.