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Before You Buy a Franchise in NJ: What You Should Know About Royalties

Before buying a franchise in New Jersey and signing a franchise agreement, it is important that you understand your royalty obligations. Royalties represent a continuing obligation that you will incur as a franchisee. Royalties are paid on a continuing basis (usually due weekly or monthly) and are typically calculated as either a percentage of your “gross revenue” (not “net”) or a fixed sum.

What Are Royalties Based On?

It is important to understand that your royalties are not contingent upon the profitability of your business. As such, you must view your continuing royalty obligation just like monthly rent and other continuing expenses.

Before buying a franchise, learn about Negotiating Franchise Fees and Protected Territories.

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