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Franchising and Royalty Payments

Franchising and Royalty Payments

If you are thinking of turning your current into a franchising company you will need to determine a fair and equitable franchise royalty fee. There are a number of questions you will need to ask yourself in determining this fee such as what services you will provide to your franchisee team and what that will cost. You will also need to take a look at the competition to determine the amount that you can honestly charge without forgoing cost conscious franchise buyers.

It is also important once you go thru this strategic brain exercise to put into your confidential operations manual the procedures for royalty payment and explain why these royalty payments are necessary and how such money is used to maintain the franchise family and system.

Below is an outline to help you with your formulation of a chapter for your operations manual. I recommend that your print this article and modify it to fit your particular franchise system or future franchise company. First go ahead and modify the items then for each number and letter item write three paragraphs to your best understanding of how you will operate the royalty payment system. After this is completed you have yourself a working rough draft for insertion into your Confidential Operations Manual. Continued Success.

ROYALTIES

I. REASONS FOR ROYALTIES

II. WHAT YOU GET

III. FRANCHISOR

IV. DIRECT PAYMENT (AUTOMATIC DEBIT)

V. CREDIT CARD SYSTEM

VI. NON PAYMENT

VII. AUTOMATIC DEBIT BOUNCING

VIII. AMOUNTS

IX. REGIONAL ADVERTISING FUNDS

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Franchising and Royalty Payments

Small Business