Establish Other Fees

Your main source of ongoing income will be the other fees you charge your franchisees. These fees are typically: royalties, advertising contributions, grand opening advertising, minimum local advertising, license rights, maintenance and repairs, refurbishing or other extraordinary expenses, insurance, additional training, late charge and interest, transfer fee, renewal fee, audit expenses, indemnification and attorney fees.

You should look at the fees your competitors charge. But don’t just copy them! Use them as your starting point and change them to your circumstances. Consider the following issues when setting your fees:

• How much does it cost for you to deliver the services you intend to deliver to your franchisees?
• Are the fees high enough to allow you to pay these costs and still get the financial return you’re counting on?

If you set the fees too high, your franchise will not be marketable against the competition. If you set them too low, it may damage your ability to provide the services you’ve promised.