The Franchise King®

Questions?
(Courtesy of Valerie Everett, Flickr)

Only a small percentage of the people that I’ve worked with over the years ever asked me about the franchise marketing fees that are charged by franchisors for marketing.

(This post may contain affiliate links. Please read my disclosure policy).

I’ve found that most potential franchise owners are more concerned about the up-front franchise fee, and the royalties they’ll have to pay. Discussions about the marketing fees tend to happen later in the process.

But, they shouldn’t be.

 

It’s A Mandatory Franchise Fee

Paying a percentage of your sales into a marketing fund is not “optional.”

If you’re doing research on a franchise, one of the top 40 questions you should be asking current franchisees of the opportunity that you’re investigating-question #24 out of 40, as a matter of fact- is this one;

Do you pay into a marketing fund?

Followed up by this one;

How much do you pay into this fund every month?”

And this one;



Free Franchise Quiz
Find Out If You Should Own A Franchise Before You Write That Big Check
Invalid email address


Do you feel what you’re paying is worth it?”

 

Ongoing Costs

When you’re writing your business plan, the fees you’ll be paying to the franchisor for marketing must be added to your projections.

If you’d like some specifics, check out how much your fees would be for a Jamba Juice franchise. Notice the wording.

jamba juice locations

(From https://www.jambafranchise.com/faq.html)

FYI– it’s not unusual to see wording like that. I’ve found that, “up to” is very common terminology when it comes to franchise marketing fee disclosure.

But, paying just 2% of your net sales can add up, so don’t forget to include these fees in your franchise business plan.

Of course this money comes out of your income too.

 

If The Franchisees Are Happy

The current franchisees of the system your looking into must feel that the fees that they’re paying into the franchise marketing fund is money well spent. Period.

If you’re calling a lot of franchisees, like I suggest you do, you’re going to find the topic of marketing fees is a hotly-contested one. Some franchisees may tell you that it is money well-spent. Others may tell you that it’s a rip-off. It’s important to listen to both sides. After you’ve done that, it’s perfectly okay to share your findings with your franchise representative. Find out what he or she has to say.

If most of the franchisees you talk with are happy, and making money, it’s usually a good sign.

A great marketing system may be providing that happiness.

If that’s the case, paying for it sounds pretty reasonable to me.

 

Please Share This Article!
6Shares
follow us in feedly
franchise article written by joel libava
Note: When you buy through links on this website, we may earn an affiliate commission. In addition, I've started to use AI to help me craft better article titles and headings.
The Franchise King® Blog
Get proven franchise research and buying tips, helpful franchising resources, plus the latest franchise news updates and more.
Recommended Reading
How Franchises Work
How Much Is A Franchise?
Pros And Cons Of A Franchise What Is The Franchise Fee? How To Buy A Franchise
Best Franchises To Own

Top 33 Business Ideas
Starbucks Franchise Facts
Featured Franchises!
10 Best Franchise Websites
About Franchise Consultants
How To Read A FDD
Questions To Ask Franchisors
Questions To Ask Franchisees Franchise Discovery Day Franchise Reviews
Top 10 Franchise Buying Tips

Free Franchise Tools Franchise Compatibility Quiz Net Worth Calculator
joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

Joel is Highly Principled
There are many people in the franchise business who claim to to be experts in the field. Unfortunately many of them lack both knowledge and integrity. Joel, however, is without question one of the most qualified and principled people I know, in or out of his industry."
- Greg Reynolds, Retired Outplacement Counselor
"Many receive advice, only the wise profit from it."
- Harper Lee