Questions about selecting a franchise system
In this section, experts answer the questions most commonly asked by franchise candidates on how to search for and select a franchise system.
Why do advertising fees have to be paid to franchisors?
Advertising fees are frequently the occasion for a special arrangement. The costs of marketing initiatives may either be included in the fixed royalties or be raised separately as a special advertising fee. Where the fee is indicated separately it is customary to pay a proportional share of net turnover or an advertising pool as opposed to paying a fixed sum at regular intervals.
When the central system exacts a fee earmarked for advertising, you as franchisee can expect concrete proof that the money raised is so used. Enquire about the investment in advertising in your area which is guaranteed to you by contract and the advertising expenditure incurred by your franchisor.
Should for example, all franchisees contribute to an advertising pool, then the advertising fee is as a rule laid down as being exclusively intended for the purposes of system advertising. Check to see what rights of participation and control you may have with respect to the use to which the money so raised is put.