What Is a Franchise Fee?

Franchise fee is a unique form of business operation. It is a contract that the brand owner uses the intangible assets of the enterprise brand, such as intellectual property (including inventions, patents, trademarks, copyrights), organizational management assets, market assets, and human assets to contract. The franchise is used by franchisees. The franchisor engages in business activities under a unified business model in accordance with the contract and pays certain fees to brand owners.

Initial fee

Right!

Franchise fee is a unique form of business operation. It is a brand owner's intangible assets such as intellectual property (including inventions, patents,

Brand royalties

The level of franchise fees is affected by many factors, in addition to profit factors, it also includes the following:

Development stage of joining the headquarters

When the franchise business of the headquarters is still in its infancy, its franchise concept has not been fully and thoroughly tested by the market, and when the business risks are relatively large, in order to attract more investors and expand its influence, the headquarters often does not hesitate to Selling concessions at low prices.

Assistance from joining headquarters

The amount of assistance provided by the franchise headquarters to franchise stores is an important factor in determining the level of franchise expenses, because the more assistance it provides, the more its management expenses will be, and the franchise fees charged to make up for the management expenses will also increase accordingly.

Management level of joining the headquarters

Although the level of franchise fees has a lot to do with the management level of the headquarters, it is difficult for outsiders to accurately assess the company's management level at a glance. The characteristics of all walks of life and the doctrines of various factions, coupled with a variety of performances, make outsiders focus on the form but not the essence. When developing the franchise business, the headquarters must not only make its management quality truly upscale, but also pay attention to the quality of the outer packaging of management quality, even to a small business card for promotion, must also be well-printed. It must not be rude and harm the company's image.

Join the promotion activities carried out by the headquarters

The cost of various publicity and promotion activities carried out by the franchise headquarters is often borne by the franchisees and is included in the franchise fee. Therefore, the franchise fee is directly proportional to the frequency of the promotion activities conducted by the headquarters, but it may not be directly proportional to the promotion effect. The headquarters can't charge as much publicity as they want for advertising. It must be promoted in a planned way and pay attention to the effect of promotion.