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Don't discount the value inherent in advertising fees. One of the greatest benefits of a franchise to the franchisee is the name recognition and advertising power of the franchisor or the network as a whole. If you don't charge advertising fees in your initial offering, be sure to include a clause for the possibility of future fees.
When determining a reasonable fee consider the amount of money required for effective regional and national advertising programs and the funds required for the development of advertising materials and promotions. Also consider the franchisee's necessary local expenditures in order to make an impact on his market.
It is not uncommon for new franchisors to require low or no contributions for advertising, until there is sufficient number of franchisees to warrant media campaigns funded by franchisee contributions.
|Jennifer Mathes, Ph.D.|