---
title: "What is a Franchise Royalty Fee?"
url: https://burnaze.com/article/69a36eb4-85be-4810-98b2-25d897f7f15a
source: "1851 Franchise"
original_url: https://1851franchise.com/what-is-a-franchise-royalty-fee-2718389
category: "Franchise Industry"
industry: "Franchise Industry"
topics: ["Finance & M&A"]
published: 2022-04-08T20:15:00.000Z
modified: 2026-11-01T02:12:14.136Z
image: https://newimage.1851franchise.com/cdn-cgi/image/quality=85,format=webp,width=1280,height=720/story/featureImage/0ad351a8167a1d36e0105d2372fa4dd41974.jpg
---

# What is a Franchise Royalty Fee?

**TL;DR:** The Small Business Administration explains that franchise royalties are collected by franchisors on a monthly basis, based on a percentage of revenue, typically ranging from 4-12%. Franchise fees, which grant access to a franchisor's business model, usually range from $20,000 to $50,000.

*originally published in 1851 Franchise on 2022-04-08. [Read the original](https://1851franchise.com/what-is-a-franchise-royalty-fee-2718389).*

## Story

When you open a franchise, you pay a franchise fee. This is an upfront cost that will give you access to a franchisor’s business model. According to the Small Business Administration, a franchise fee is a license to own and operate a franchise business.

Franchisors charge a franchise fee that typically ranges from $20,000 to $50,000, but in some cases can run as high as $100,000.

There are also “other” franchise fees that include marketing fees and royalties.

The Small Business Administration stated that franchise royalties are collected by the franchisor on a monthly basis, and are based on a percentage of revenue. Franchise royalties range from 4% up to 12% or more. The actual percentage depends on the type of franchise you are opening.

According to the Small Business Administration, a food franchise often has a lower franchise royalty fee than other types of franchises due to the high volume of revenue.

## Entities

- 1851 Franchise (publication)
- Franchise Industry (sector)
- Small Business Administration (regulator)
- franchise fee (topic)
- franchise royalty (topic)
- revenue percentage (topic)

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Originally reported by 1851 Franchise (https://1851franchise.com/what-is-a-franchise-royalty-fee-2718389). Summarized by Burnaze (https://burnaze.com/article/69a36eb4-85be-4810-98b2-25d897f7f15a).