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| | | Ice Cream Shop Franchising Fees Jan 14, 2008 | |
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Included in your franchise start up is a franchise fee that you pay to the company you purchase the franchise from. You are buying a proven business model, product and support and for this the franchisor expects to be compensated. It's how franchising works.
What is a Franchise Fee?
Part of the estimated start up costs for each franchise include a franchis fee. This can range from $25,000 to $35,000, depending on the chosen franchise. This is a fee charged so that you can use the name of the franchise and become part of their system. It buys you proven business concept and and often an instant reputation.
What are Franchise Royalties?
All franchises charge a royalty. This is a percentage of your gross sales and gets paid to the franchise for the use of their image, business concept and system. A typical franchise royalty is 5-6% of gross sales.
What is the Franchise Marketing Pool?
Franchisees are also responsible for investing a portion of revenue (based on gross sales) for marketing and advertising. These funds go toward television, radio and print marketing that is spread over wider territories and allows multiple locations to benefit from ad spots that no single store could afford on their own. These fees average about 2-3%.
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