Franchise Fees Explained: Entry Fee, Royalties and Marketing Fund

Franchise fees

Whether you are pricing your own franchise or evaluating one to buy, the fee structure tells you a lot about the brand.

1. The entry fee

A one-time payment for the right to open under the brand. It usually covers recruiting and onboarding: training, opening support, access to manuals and help with site selection.

For brand owners: cover your real onboarding cost with a reasonable margin. Too high scares good investors away; too low leaves you unable to support them.

For investors: ask exactly what the fee includes. Training days, opening team, design files and first marketing campaign should be written down.

2. Royalties

An ongoing fee, most often a percentage of monthly revenue, sometimes a fixed monthly amount. It pays for the brand, the system and continuing support.

• Percentage royalties grow with the franchisee’s success and align both sides.
• Fixed royalties are predictable but can weigh on a new or slow branch.

The key test: after royalties, marketing and all operating costs, does the franchisee still earn an attractive profit and pay back the investment in a reasonable period?

3. Marketing fund

Many brands collect a small percentage of revenue into a shared fund for brand campaigns, content and digital advertising that benefit all branches. Ask how it is managed and reported, and whether local marketing is extra.

4. Other fees to look for

• Technology and software fees (POS, ordering apps, reporting)
• Training fees for new staff after opening
• Renewal and transfer fees
• Mark-ups on mandatory supplies

Total investment is more than the fee

The entry fee is often a small part of the total. Fit-out, equipment, first stock, deposits and working capital usually make up most of it. For a sector example, see restaurant franchise costs in Türkiye.

How do you compare franchise fees between two brands?

Compare what each fee buys, not only its size. Put both offers side by side over the full agreement term: entry fee, royalty base and rate, marketing contribution, technology or training charges, and renewal or transfer fees. Then ask what support stands behind each payment, from site selection and opening training to supply terms and ongoing marketing. A lower fee with thin support can cost more than a higher fee with a proven system. To test whether the numbers leave room for profit, use our guide to franchise unit economics, payback and break-even, and if you are the brand setting the fees, see how to price your franchise.

This article is general information, not legal, tax or investment advice. Always review agreements with qualified advisers.