Franchise Royalties (Part A)

If you plan on starting a franchise in New York, you may want to know what royalty payments you'll have to make to the franchisor. Royalty payments are payments made for the use of intellectual property.

This may include a company's brand name, its logos, its products and services, and its overall business plan. For instance, if you want to open a McDonald's franchise, you will have to make royalty payments for the use of the company's brand. While as a franchisee you'll earn your revenue from daily operations, the franchisor will earn its revenue from your monthly royalty payments.

Why must I pay royalties?

When starting a franchise in New York, you must realize that you are becoming part of a much larger organization. The royalties you pay will help that organization:

  • Turn a profit;
  • Maintain an organized business structure; and
  • Ensure that all avenues run smoothly between your franchise(s) and the franchisor.


How Your Royalty Payments Also Benefit Your Franchise

With the royalty payments that you make, the franchisor can keep up to date with technological advancements, as well as create fresh products and services that will enhance your own daily business operations. Royalties also help the company pay their own monthly expenses. Just as you will have monthly bills from your own franchise(s), the McDonald's Corporation will have to pay rent, utilities, and compensate their staff.

Furthermore, royalty payments will help a franchisor expand their unique brand. It will help them to advertise, grow, and push their business into international markets. And when starting a franchise in New York, it helps to be affiliated with an international brand. The more your business' name is recognized, the more loyalty customers will show, and revenues will increase for you as well as the business franchisor.

To learn more about royalty payments when starting a franchise in New York, you can the professional advice of a New York franchise attorney.

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