GLOSSARY

Royalty

A royalty is the ongoing fee — usually a percentage of your gross sales — that a franchisee pays the franchisor every period, disclosed in FDD Item 6.

Royalties are how franchisors make most of their money. A typical royalty is 4–8% of gross sales (not profit), paid weekly or monthly for the life of the agreement. Many brands also charge a separate marketing/advertising fee on top.

Because royalties come off the top of revenue rather than profit, a high royalty can quietly squeeze a franchisee even when sales look healthy. We surface each brand's royalty rate so you can compare the ongoing drag, not just the upfront price.