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Advertising fees are calculated on a percentage base of the franchisee's gross sales and are usually collected once a month. Advertising fees can range from 1 percent to 4 percent. Some franchisors charge a flat fee while other franchisors have no advertising fee at all.

Royalty Fee The royalty fee is usually paid weekly or monthly, and is most commonly calculated as a percentage of gross sales, typically ranging between 5 to 9 percent. In some systems the percentage increases or decreases depending on the level of sales.

Advertising costs are categorized as those expenses associated with marketing a company's brand, product, or service via media outlets. Advertising is defined as the paid distribution of a controlled marketing message found in print ads, radio or TV broadcast, online, or via direct mail.

Steps to Start a Franchise Business Franchise application form completed in full, which you can find on the franchising company's website. ... Letter of Intent (LOI), which states the reasons for applying for the said franchise. Map of your proposed site of business. ... Your updated resume/profile.

In some franchise systems, these funds are also referred to as an advertising fund. The principal purpose of a brand fund is to enhance and support the system's brand and generally is used to pay for creative work, media placement, marketing salaries and costs, market research, etc.

It's common for franchisees to have to pay a marketing fee to the franchisor, in addition to royalty fees.

Franchise royalties are usually collected by your franchisor on a monthly basis. Like marketing fees, these fees are based on a percentage of your revenue. But there's one major difference; the percentages are higher. Franchise royalties range from 4% of your revenue all the way up to 12% or more.

On average, franchise fees range from about $25,000 to $50,000. However, these costs can get much lower or greater depending on the company you pick. You will also need to budget for ongoing payments like technology costs, marketing/advertising fees, and royalties.