Franchise Times: Franchises Are Rethinking Their Royalty Rates To Make Their Brands More Attractive

As the franchise industry gets increasingly competitive to land qualified, experienced multi-unit prospects, many brands are rethinking their strategy when it comes to royalty fees in order to modernize and make their brands more attractive. According to an article in the May issue of Franchise Times, 355 new concepts are projected to join the franchise fray in 2016. That's over 100 new concepts more than there were five years ago- and brands are utilizing the royalty fee structure as a way to improve their brand's offering.

“The old rule of thumb going back to the early ‘90s was you didn’t mess with royalties—that’s the rate and that’s it, regardless,” said Sean Fitzgerald, chief development strategist at No Limit Agency. “That’s the old approach, and I think you’re starting to see a trend of discounting royalties or people taking a different approach.”