Real-world examples of franchise fees and payments: practical examples for franchise agreements

Lawyers and franchisors love definitions. Franchisees care about one thing first: “What do I actually pay, and when?” So let’s start with examples of franchise fees and payments: practical examples you’re likely to see in modern franchise agreements.

Picture a mid-range fast-casual restaurant concept in the U.S. in 2024:

• Initial franchise fee: $40,000, paid in full on signing the franchise agreement.
• Ongoing royalty: 6% of weekly gross sales, paid by ACH every Tuesday.
• Brand fund/marketing fee: 3% of gross sales, same timing as royalties.
• Local marketing spend: minimum 2% of gross sales, spent directly by the franchisee.
• Technology fee: $500 per month for POS, software licenses, and support.
• Training fee: first two trainees included; each additional trainee $1,000 plus travel.
• Renewal fee: 25% of the then-current initial fee, due on signing a renewal term.

Those numbers are representative of what you’ll see in many FDDs filed with the FTC and state regulators. The examples of franchise fees and payments below break those categories down with more nuance and variations across industries.

Initial franchise fees: examples include flat, territory-based, and staged payments

Most franchise agreements start with an initial fee due on signing. But the structure varies more than people expect.

Flat initial fee: classic fast-food example

A quick-service restaurant might charge a flat $50,000 initial franchise fee for a single location. In a typical example of this model:

• The entire $50,000 is due when the franchise agreement is signed.
• It is usually nonrefundable, except for narrow cases (for example, failure to approve a site within a stated time window).
• It covers initial training, site selection assistance, and the right to operate under the brand.

This is the best example of a simple, one-time fee that’s easy to model but still hits cash flow hard at the beginning.

Territory-based fee: home services franchise example

Consider a residential cleaning franchise that grants exclusive territories based on household count. An example of this structure in 2025 might look like:

• Base territory (50,000 households): $30,000 initial fee.
• Each additional 10,000 households: $5,000 extra.

If a franchisee wants 70,000 households, the initial fee becomes $40,000. These examples of franchise fees and payments show how territory size directly drives the upfront cost.

Staged initial payments: multi-unit development example

Multi-unit development deals often spread payments over time. For instance, a fitness studio franchisor might sign a three-unit development agreement with:

• $25,000 development fee on signing.
• $10,000 initial fee per location, due when each individual franchise agreement is signed.

So a franchisee opening three studios eventually pays \(55,000 in franchise fees, but only \)25,000 is due on day one. For cash-strapped operators, this staged example of payment timing can make a big difference.

Ongoing royalties: percentage vs fixed-fee examples of franchise payments

Royalties are the lifeblood of most franchisors. The structure can dramatically shift risk between franchisor and franchisee.

Percentage-of-gross-sales royalty: restaurant and retail examples

The most common model is a percentage of gross sales. For a coffee shop franchise, examples of franchise fees and payments: practical examples might include:

• Royalty rate: 5% of weekly gross sales.
• Definition of gross sales: all revenue from products and services, before discounts, excluding sales tax and refunds.
• Payment method: weekly ACH draft from a designated operating account.

If the shop does \(40,000 in gross sales in a month, the royalty is \)2,000. Add a 2% marketing fee and you’re at $2,800 in system fees before rent, labor, or cost of goods.

Sliding-scale royalty: volume-based example

Some 2024–2025 FDDs show sliding royalty scales designed to reward higher sales. A fitness franchise may use:

• 7% on the first $500,000 of annual gross sales.
• 6% on \(500,001–\)1,000,000.
• 5% above $1,000,000.

This example of a tiered royalty keeps the franchisor’s upside while letting high performers keep a slightly larger slice of incremental revenue.

Fixed-fee royalty: professional services example

In certain professional or B2B service franchises, examples include fixed monthly royalties instead of a percentage. A bookkeeping franchise might charge:

• $1,500 per month flat royalty for the first three years.
• \(2,000 per month once annual revenue exceeds \)300,000.

This model can be attractive in lower-margin or highly seasonal businesses because the franchisee knows the maximum royalty in advance.

Marketing and brand fund contributions: practical examples across industries

Franchisees often underestimate the marketing line items. Here are real examples of how these payments are structured.

National brand fund: typical percentage-based examples

Most consumer-facing franchises require contributions to a brand or advertising fund. Common examples of franchise fees and payments in this category:

• Fast-casual chain: 3% of gross sales to the national ad fund.
• Budget hotel brand: 4% of room revenue to the system marketing fund.

These payments are usually:

• Collected weekly or monthly.
• Controlled entirely by the franchisor.
• Used for national or regional campaigns, digital advertising, and brand assets.

The FTC’s Franchise Rule requires disclosure of how the fund can be used, though it does not regulate the exact percentages. You can review the Rule itself on the Federal Trade Commission site: https://www.ftc.gov/advice-guidance/competition-guidance/franchise-rule.

Local advertising obligations: minimum spend examples

On top of brand fund contributions, franchisees are often required to spend a minimum amount locally. Examples include:

• A sandwich franchise requiring at least 2% of monthly gross sales on local marketing.
• A tutoring franchise requiring a minimum of $1,000 per month in local advertising in the first year, then 1% of gross sales thereafter.

The key point: this is usually spend, not a fee paid to the franchisor, though some agreements allow the franchisor to manage local campaigns and bill back the cost.

Technology, training, and support: overlooked examples of franchise fees and payments

Modern systems increasingly rely on monthly tech and support fees. These are often buried deeper in the fee table.

Technology platform fees: 2024–2025 trend example

In 2024 and 2025, more FDDs show separate technology charges as franchisors invest in POS, apps, and data analytics. A quick-service restaurant franchise might specify:

• $400 per month technology fee per location for POS licensing and support.
• Additional $100 per month for online ordering and mobile app integration.

A home-care franchise might charge:

• $250 per month for CRM, scheduling, and electronic visit verification tools.

These examples of franchise fees and payments are smaller line items individually but add up over time.

Training and ongoing support: examples include per-person and per-event fees

Initial training is often covered by the initial fee, but not always. Typical real examples:

• First two attendees at initial training included; each additional attendee $1,500.
• Mandatory annual conference: $1,000 registration fee per person, plus travel and lodging.

Over a 10-year term, these training and conference payments can materially affect the total cost of ownership.

Real examples of franchise fees tied to property and build-out

Franchising often intersects with real estate, and the fee structures follow.

Site approval and architectural review fees

Some brands charge administrative fees related to site selection and build-out. For example:

• Site review fee: $1,000 per proposed site after the first two rejections.
• Plan review fee: $2,500 for reviewing architectural drawings and specifications.

These examples of franchise fees and payments are usually flat, one-time charges, but they can pop up multiple times if a project stalls or changes direction.

Lease-related payments: sublease and rent markup examples

In a landlord-franchisor model, the franchisor signs the master lease and subleases to the franchisee. A typical example of payment structure:

• Franchisor’s base rent: $8,000 per month.
• Franchisee’s sublease rent: $8,800 per month (10% markup retained by franchisor).

While not labeled as a “franchise fee,” that $800 difference functions economically as an ongoing fee related to occupancy.

The U.S. Small Business Administration (SBA) provides guidance on evaluating lease obligations in small business and franchise settings, which is worth reviewing when you’re modeling these costs: https://www.sba.gov/business-guide/plan-your-business/buy-existing-business-or-franchise.

Examples of franchise fees and payments across different industries

To see how these concepts play out, compare a few simplified, real examples drawn from common franchise models. These are illustrative, not tied to any one brand.

Fast-casual restaurant example

Assume a single-unit operator in a mid-sized U.S. city:

• Initial franchise fee: $45,000.
• Royalty: 6% of gross sales.
• Brand fund: 3% of gross sales.
• Local marketing: minimum 2% of gross sales spent locally.
• Technology: $500 per month.
• Training: initial training for two people included; additional person $2,000.

If the restaurant averages $120,000 in monthly gross sales, ongoing system fees look like:

• Royalty: $7,200.
• Brand fund: $3,600.
• Tech fee: $500.

That’s $11,300 per month going directly to or through the franchisor, plus local marketing spend.

Fitness studio example

A boutique fitness studio franchise might use:

• Initial fee: $39,000.
• Royalty: 7% of gross sales.
• Marketing fund: 2% of gross sales.
• Technology: $300 per month (booking app and CRM).
• Equipment lease payments: $2,500 per month to a preferred vendor.

If the studio does $70,000 in monthly revenue, the recurring payments to the franchisor are:

• Royalty: $4,900.
• Marketing fund: $1,400.
• Tech: $300.

Total: $6,600 per month, before rent and payroll.

Home services example (lawn care or cleaning)

A mobile home services franchise might structure fees differently:

• Initial fee: $20,000 for a territory of 100,000 population.
• Royalty: 8% of gross sales.
• Brand fund: 1% of gross sales.
• Local marketing: minimum $1,000 per month in year one.
• Call center fee: $15 per booked job routed through the franchisor’s call center.

If the franchisee books 200 jobs in a month at an average of \(200 each, that’s \)40,000 in gross sales. Payments look like:

• Royalty: $3,200.
• Brand fund: $400.
• Call center: $3,000.

Here, the per-job fee is a real example of a variable cost that behaves like an extra royalty.

Professional services example (tax prep or bookkeeping)

A tax preparation franchise might adopt a hybrid model:

• Initial fee: $30,000.
• Royalty: greater of 10% of gross receipts or $1,000 per month.
• Technology and compliance: $250 per month.
• Training: $750 per new tax preparer trained by the franchisor.

In a slow off-season month with \(5,000 in revenue, the franchisee still pays \)1,000 in royalty because of the monthly minimum. In peak season with \(60,000 in revenue, the royalty jumps to \)6,000.

These examples of franchise fees and payments: practical examples show how minimums and variable fees can shift risk back to the franchisee.

Legal drafting tips: using examples of franchise fees and payments in agreements

If you’re drafting or revising a franchise agreement, using examples of franchise fees and payments directly in the document can prevent disputes. A few practical moves:

• Pair every defined fee with at least one numeric example showing how it is calculated.
• Clarify timing with real calendar references (for example, “by the 10th day after the end of each calendar month”).
• Spell out what happens if the franchisor changes technology vendors or marketing strategies and how that affects fees.

The International Franchise Association and many law school clinics publish guidance on reading FDDs and fee tables. For a more academic perspective on contract interpretation and disclosure, the Harvard Law School libraries and clinics often host franchise-related resources: https://hls.harvard.edu/library/.

FAQ: examples of franchise fees and payments in common questions

What are common examples of franchise fees and payments in a typical FDD?

Common examples of franchise fees and payments listed in Item 5 and Item 6 of a U.S. FDD include the initial franchise fee, ongoing royalties (usually a percentage of gross sales), brand or marketing fund contributions, technology or software fees, training fees, renewal fees, transfer fees, and audit or late payment charges.

Can you give an example of how royalties and marketing fees affect monthly cash flow?

Assume a franchisee has \(100,000 in monthly gross sales, a 6% royalty, and a 3% marketing fund fee. That means \)9,000 goes to the franchisor each month before rent, payroll, and inventory. Add a \(400 technology fee and a \)1,000 required local marketing spend, and you’re at $10,400 in franchise-related payments.

Are there examples of franchise systems that use flat-fee royalties instead of percentages?

Yes. Some professional services and B2B franchises use flat monthly fees. For instance, a bookkeeping franchise might charge $1,500 per month regardless of revenue up to a threshold, then increase the fee once the franchisee crosses a set sales level. This is a clear example of a royalty structure that trades upside for predictability.

Do all franchise agreements include technology and training fees?

Not all, but in 2024–2025 it is increasingly rare to see an FDD without at least some technology-related payment. Even if it is not labeled as a separate technology fee, the cost may appear as a required vendor payment for POS, CRM, or scheduling software. Training is usually baked into the initial fee, but examples include extra charges for additional trainees, refresher courses, or mandatory conferences.

Where can I find more real examples of franchise fees and payments in official documents?

In the United States, FDDs are often filed with state regulators in registration states such as California, New York, and Illinois. Many of those filings are accessible through state websites or paid databases. The FTC explains your rights and what must be disclosed in the Franchise Rule, available here: https://www.ftc.gov/advice-guidance/competition-guidance/franchise-rule. The SBA also offers guidance on buying a franchise and understanding its financial structure: https://www.sba.gov/business-guide/plan-your-business/buy-existing-business-or-franchise.

If you’re drafting a franchise agreement or comparing brands, walk through the fees using your own projected sales and these examples of franchise fees and payments: practical examples. The math will tell you very quickly whether the deal supports a sustainable business or just a great revenue stream for the franchisor.