In this edition of Ask the expert, Franchise guru Armando Bartolome explains to us the basis for advertising fees and royalty here.
Q: Why do franchisors charge royalty and advertising fees? [See additional facts about franchise agreements here]
A: Royalty and Advertising fees are meant to help sustain the business. [See tips in choosing the right franchise here]
For royalty, it is a percentage charged by the franchisor for the continuous support provided. Continuous support cover having the Research and Development for products and services, Field Operations for visitation and consultations and Quality Assurance Supervision ,etc. [See 10 essential questions a franchise applicant should ask here]
For advertising, the awareness of the brand is a necessity both on the level of national or system wide and within each location’s locality. Consumers need to be constantly fed about the brand’s existence. [Learn more about cheap, alternative advertising here]
Armando "Butz" O. Bartolome is currently President of GMB Franchise Developers, the pioneer franchise development company in the country and is behind the growth and expansion of over 200 local companies. You may reach him at firstname.lastname@example.org or post your franchising how-to questions here.