What do franchise royalties cover?
If you’re investing in a franchise in New Zealand, you must be aware of the costs associated with it. The amounts you pay for the franchise include an initial investment and various ongoing fees, including a royalty fee. Here’s a guide to the franchise royalties and how they can benefit your business:
What is a royalty fee?
The royalty fee is generally a percentage of the total sales collected by the franchisor. Depending on the franchise agreement, it can be paid weekly, monthly or quarterly. The franchisees should understand that royalties differ from the initial franchise fee, which is a one-time expense.
Royalties are funds that franchisees pay for the permission to use the franchise proprietary trademarks, branding and processes. That’s why it’s essential to find a reputable franchise opportunity to maximise what you’re paying for.
What do you get in exchange for royalties?
Royalties provide ongoing access to the brand and intellectual property (IP). It typically covers the following items:
- Ongoing support from the franchisor
A good franchise business for sale offers ongoing support to their franchisees. It can include training programs, operations support and other resources that can help you run your business successfully.
As a franchise partner, you’ll have a support network, including the franchisor and other franchisees that are experienced and knowledgeable with the industry and business operations. You can apply their best practices to help you grow your business.
- Proven system and business management tools
Instead of doing everything from scratch, franchisors offer a proven system that will allow you to make fewer mistakes. It’s better to invest in a franchise opportunity that provides ongoing IT support and business management tools designed to help you manage your business efficiently.
If you’re interested in buying a good franchise opportunity, reach out to Laser Clinics New Zealand. We offer a unique partnership model that greatly reduces start-up costs. We also provide ongoing support and marketing initiatives at national and local levels. Make an enquiry now!
