Royalty fee is a term commonly heard in various industries. In the music industry, it is the amount paid to music copyright holders and songwriters by someone who gains a commercial benefit from the copyrighted material. Likewise in the fashion industry, it is the fee paid in exchange for the license to use the names of the leading fashion houses in the world to one’s products.
But as many already know, royalty fee is also a term liberally used in the franchise industry. A royalty is a legal, ongoing fee that covers the use of the trademark, business system, and administrative support of a franchise. This is paid on top of the franchise fee upfront and is paid over the life of the franchise agreement.
In most cases, royalty fees come in two forms: fixed and percentage. To guide you through these types of royalties, here’s an infographic from Business Franchise Australia, a bi-monthly publication offering the latest news, expert advice, and franchise information from across Australia and New Zealand, that explains the truth about fixed vs. percentage royalty fees.
Infographic Source: http://www.businessfranchiseaustralia.com.au/blog/truth-about-fixed-versus-percentage-royalty-fees
