Franchise Fee

What is the meaning / definition of Franchise Fee in the hospitality industry?

The Franchise Fee or cost is an initial payment that a franchisee makes towards his franchisor in order to join the franchise.

Only when the Franchise Fee has been paid in full, the franchisee may begin operations as a franchise, and the franchise agreement is officially valid. Besides the initial Franchise Fee, franchisors are also often required to pay royalty fees which are regular monthly payments. These payments are typically a percentage of either the franchiseeโ€™s gross or net revenue. Overall, Franchise Fees vary greatly depending on the business and the applicable franchisor.

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About the Author:

As CEO and Founder of XOTELS, Patrick Landman has made it his mission to turn hotels and resorts into local market leaders. XOTELSยด diverse expertise and deep-knowledge across revenue management consulting, hotel management, and hotel consulting, enables us to drive results for independent boutique hotels, luxury resorts, and innovative lodging concepts. Below you will find opinion articles written by Patrick Landman.