Franchise Fees and Royalties Explained: What New Franchisors Need to Know

When business owners in New Zealand start exploring franchising, one of the first questions they ask is: What are franchise fees and royalties, and how do they work? These costs are a crucial part of any franchise system, and understanding them is key to determining if franchising suits your business. Let’s break it down into simple terms.

What Are Franchise Fees?

The franchise fee is a one-time payment a franchisee makes when they join your network. This fee essentially grants them the right to use your brand, systems, and training. Think of it as their investment into your proven business model.

For franchisors, this fee is often used to cover the cost of onboarding franchisees, including training, marketing materials, and any initial support they need to set up their business. At Tereza Murray Franchising, we help you determine a competitive franchise fee that reflects the value of your offering while remaining attractive to prospective franchisees.

What Are Royalties?

Royalties are ongoing payments made by franchisees, typically calculated as a percentage of their revenue or as a fixed fee. These payments ensure the franchisor has the resources to provide ongoing support, innovation, and system improvements.

In New Zealand, royalty rates vary depending on the industry and the level of support provided. Some businesses opt for lower royalties and charge additional fees for optional services, while others include everything under a single percentage. We guide you through structuring a royalty system that works for both you and your franchisees.

Why Fees and Royalties Matter

Franchise fees and royalties aren’t just about covering costs—they’re about maintaining a healthy relationship between the franchisor and franchisee. A fair and transparent fee structure sets the tone for a strong partnership. Franchisees should feel they’re receiving value for their payments, whether it’s through marketing support, training, or innovation.

With our expertise, you don’t need to worry about figuring this out on your own. Tereza Murray Franchising offers the most competitive franchise development package in New Zealand. We help you design a fee structure that ensures sustainable growth while attracting high-quality franchisees.

What to Expect with Our Services

If you’re considering franchising your business and wondering how to structure franchise fees and royalties, we’ve got you covered. From creating legally compliant agreements to providing insights into what works best in your industry, our team ensures your system is set up for long-term success. Plus, with our comprehensive package, you could recover our fee with your very first franchise sale.

Don’t let fees and royalties hold you back. Let’s chat about how franchising can take your business to new heights in New Zealand.