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.
If you have questions regarding your royalty payments‚ you can get the professional advice of a New York franchise attorney.
If you are interested in starting New York franchise‚ you may want to know about the royalty payments you will need to make to the franchisor. To learn more about franchise royalties‚ visit our article library.
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