What Do I Get For My Royalty Payments?
Royalty payments are a standard part of any franchise agreement. This means that you will have to make a monthly payment directly to the franchisor. Generally‚ this will be a small percentage of your gross monthly revenues. And while you won't receive a specific return on your monthly royalty payments‚ they will help the franchisor build a better business‚ and ultimately a more profitable brand.
A franchisor will use your royalty payments for things such as:
- Maintaining a sound and organized business;
- Creating new products and services‚ which will enhance the operations of your own franchise (s);
- Marketing and advertising the brand;
- Expanding into new and international markets‚ which will strengthen the franchise name; and
- Managing the costs and operations of the larger corporation.
Without receiving royalty payments from their franchisees‚ a franchisor would be unable to grow and maintain a successful franchise business. Royalty payments can be seen as contributions to the overall business plan. While they do help the franchisor turn a profit‚ they also help to build a structured and recognizable brand‚ which will ultimately benefit you as much as it will benefit the franchisor.
By Charles Internicola July 23, 2010
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