Royalty vs. marketing fee: what each one pays for
Two percentages that look alike but fund different things.
Most franchise systems charge two ongoing fees, and both are often stated as a percentage of gross sales.
The royalty
The royalty is payment for using the brand, the system, and ongoing support. It goes to the franchisor.
The marketing or brand fund fee
The marketing fee goes into a fund for advertising and brand promotion. Some systems pool it nationally. Others split it between national and local spending, or ask owners to spend a separate amount on local marketing themselves.
Reading them together
Adding the two percentages gives the total share of gross sales owed in ongoing fees. That share is taken from sales, not profit, so it is owed even in a slow month.
Details that change the picture
- Minimum fees that apply regardless of sales
- Fees stated as a flat weekly or monthly amount instead of a percentage
- Rates that step up after an introductory period
We report each fee as written, with its basis and year, and label any total we calculate as calculated.