How does a franchisor make money?
Usually a franchisor charges a flat amount called the franchise fee for the rights to operate a franchise. The fee is in addition to the costs to open the business in the franchisees chosen location. In addition, franchisors receive ongoing fees on sales or revenues that vary greatly but typically are in the 6% to 10% range. Most also collect an advertising fee to support advertising and other promotional efforts. These too vary but usually range from 2% to 4% of revenues.
