A lot of us are slowly shifting to the idea of owning a business. Of course, everyone does not wish to be employees forever, right? Some of us want to be the own boss, some actually want to spend more time on some things than in an office, etc. Since this is the case, a lot of Filipinos think of something to put up. If you’ve been born in a well-off family, franchising might be one of the options you’ve thought of. Franchises are kind of a stable way to put it but they’re expensive. Along with that, it’s not just the franchise fee you’ll be thinking of. To help you avoid your idea of having “hidden fees,” we will also be discussing what other payments you will make if you buy out a franchise.
When a person is looking to be part of the franchise or to own one, this franchise fee typically is like the initial payment. However, the franchise fee is like buying the name or part of that specific brand/franchises. This price is associated to regain the initial cost outlays that systemizes the whole franchise. To set the expectation and if you’ve done enough research, paying for the franchise fee takes years for the Return of Investment (RoI).
Royalty Fee
The royalty fee however is not a one-time charge as it is the fee for gaining profit by using the name of the brand or the business. Some brands or franchising companies require payment each month for the royalty fee and usually, the amount they need to receive is around 5 – 7 percent of the total sales each month (if it’s per month). Although you would think that this is just a small fee, there are companies that have different methods or requirements in paying the royalty fee. Some have flat rates per month or per quarter; some have flat rates + a total percentage of the sales. This is as well dependent that the name is being properly used to effectively drive sales to their maximum.
Marketing Fee
Other than the royalty fee, there is also the marketing fee. The marketing fee is a fee imposed by the franchiser to franchisees for conducting the marketing and for spreading the brand name. The reason why is because it actually is the franchising manager’s job to conduct effective marketing to ensure that all franchises are to get revenues to meet or to even exceed the target. The fee ranges from 2 – 5 percent depending on the agreements you have with the franchising company.
License Fee
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