Understanding franchise fees – part two
As previously discussed, the franchise fees that you will need to pay your franchisor can be broken down into different categories. We have already explained the franchise deposit, the initial franchise fees and the ongoing franchise gees but something which is often forgotten is the advertising fee.
You will need to pay an advertising fee to pay for the costs of advertising the franchise. The advertising fee is normally based upon a percentage of gross sales or net sales and are normally between one and five per cent of the gross sales.
The fees will normally go into a regional or national fund and will be used for marketing and advertising campaigns.
It is important to establish what the advertising fee is before you agree to anything. You need to check that the fee they ask of you is the same across the network and you should compare this to other franchise networks. Take a look at how the advertising fee is likely to benefit your franchise and what you will get for your money.
There is a lot to think about when it comes to the financial side of starting a franchise, so ensure that you carry out all the relevant research into franchise fees before taking on any franchise opportunities.