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The economicsRoyalty
An ongoing payment, usually a percentage of revenue, for continued use of the brand and ongoing operational support.
Definition
An ongoing payment, usually a percentage of revenue, for continued use of the brand and ongoing operational support.
Where this sits
The flow of money between the parties determines the health of the whole system. If partners do not profit, no system is sustainable however strong the brand.
Related terms in this topic
Initial franchise feeA one-time payment on signing, in exchange for the right to use the brand, initial training and opening support.
Marketing fundA pooled contribution from partners funding brand-level marketing run by the franchisor, separate from local outlet marketing spend.
Total initial investmentAll the capital needed to open: franchise fee, build-out, equipment, opening inventory and working capital for the early period.