Knowledge Base

What is a franchise management fee?

Costs
Written by
Sam Stawarz
Published on
June 12, 2023

Introduction

A franchise management fee is just one part of the agreement between a business owner and a franchise company. The fee is usually a fixed fee per month that rises with inflation.

A franchise management fee is an ongoing fee paid by the franchisor to the franchisee.

A franchise management fee is an ongoing fee paid by the franchisor to the franchisee. It's typically paid monthly and is instead of paying a royalty payment..

Franchisees pay this fee up on an ongoing basis as part of their investment in opening a new business, but it doesn't guarantee that they'll be successful with their location. In fact, some franchisors charge more than one type of management fee-for example, there may be additional costs associated with operating your store or restaurant (more on those below).

A franchisor may pay for or include some startup costs for the franchisee, such as legal fees, accounting fees and initial building or equipment costs.

The franchise management fee is a charge paid by the franchisee to cover the franchisor's costs of setting up their new business. It can include legal fees, accounting fees and initial building or equipment costs. The amount of this fee varies depending on the size of your initial investment and how much help you need from them in setting up your business.

You will also have ongoing expenses as part of running a franchise-including advertising, marketing materials and other ongoing costs associated with running your store-which means that while you may not see any profit at first because of these upfront charges (and possibly even some losses), over time they should become less significant as more customers come through the door

The franchise management fee is used to cover these costs, as well as ongoing operating costs and other services.

Conclusion

The franchise management fee is an important part of the franchise relationship. It helps both sides of the equation understand what they're getting into, so that no surprises come up later on down the road. It's also a way for the franchisor to protect itself from bad apples who might not be able to pay their bills or run an effective business operation.

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