Franchise Fee And Royalty Fee

When buying a franchise, you have to spend some money or often called fee. General there are two types of fees: a franchise fee and royalty fee.Fee besides these two, there is the added Franchisor marketing or advertising fees. Let us one by one surgeon.
Franchise fee is the fee you paid to buy the brand that franchisor.Fee normally wear because you bought a Franchisor experience over many years so you do not need to repeat the failures that had ever happened. Any brand prices are not cheap. Coca-Cola brand, for example, is more expensive than the entire capitalization of its physical assets.
Therefore, do not Grumble if the fee is quite expensive, depending on the brand, big name, and Franchisor of business experience that you select. This fee is generally valid for the period of 5 years and thereafter may be extended. Ask a franchise fee of 5 years after the first period ends if you want to extend.
The next fee is a royalty fee. This fee is paid every month. Most of the Franchisor wearing this fee from gross sales per month and several others of gross sales after taxes. Generally, these fees are used to support business frsnchisee Franchisor.
Support can be given control of the quality and national marketing support if Franchisor does not charge a monthly marketing fee.
The amount of this fee varies, depending on the category of business. In the food business, general, ranges from 3.5% -5%, while the range of educational services 10%.
Marketing or advertising fee is a fee levied Franchisor to conduct joint promotions. The amount also varies. But certainly, if the Franchisor picked this fee, ask what kind of promotional programs that do. If it is not clear, you are obliged to question these funds for anything.
The third addition to the above fees, there are other costs you would have to spend, the investment cost. This fee is used to buy assets for a sale. These assets belong to you completely. If things happen that are not desirable, such as business bankruptcy, these assets can be sold for some money you can go back even though the amount will decrease.
Franchisor have standards associated with the use of assets. There Franchisor who require the franchisee to buy these assets from him, but some are not, provided in accordance with the specifications provided. Most of the Franchisor assists in Preparing the opening franchisee outlets by providing assistance so that the asset purchase franchisee hassle.
Because the franchise is the general retail business, which sells directly to consumers, the form of his outlets are usually in the form of store.
When purchased the assets of the business attributes and identity, such as boards and neon box brands. In addition, tools and equipment necessary for the sale, such as tables, chairs, cash registers, and many more. Make sure you are sufficient funds to finance all the investment needed.
Should, in addition to information, general BO (business opportunity) does not apply BO fee. BO ekspilsit usually apply business packages to choose from.
In this package, including all tools and equipment and assets needed to be ready to operate outlets. Because this package usually includes a profit for the owners BO, measure whether the assets you receive fair and the value you paid are not too expensive. Whereas in the case of royalty fees, which have picked BO, but some do not. Amount is usually lower than those imposed in the franchise business.
NOTE!
Franchise fee = fee to buy a brand, a big name, and the experience of Franchisor
Royalty fee = monthly fee of gross sales per month to finance the Franchisor support the franchisee
Marketing / advertising fee = monthly fee to do joint promotions.
Investment = the funds to purchase assets for a sale.
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