Royalty Calculator
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What this tool does
Compare up to three franchise fee structures over ten years, side by side.
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What this calculates
Fee structures are hard to compare because they are quoted in different shapes: a percentage of gross here, a flat monthly minimum there, an ad fund on top, a technology fee that only appears in a schedule. This puts up to three structures side by side and totals what each one actually costs across ten years of trading, on the same revenue assumption.
What you will need
Projected annual revenue. The same figure for every option, otherwise you are comparing markets rather than fee structures. Include your expected growth if the tool asks for it, since percentage fees scale with the top line and flat fees do not.
Every recurring charge. Royalty, advertising or brand fund, technology and software fees, required training refreshers, and any local marketing minimum. The charge people most often leave out is the one that turns a favourable comparison around.
Minimums and floors. A percentage royalty with a monthly minimum behaves like a flat fee in a weak year, which is exactly the year it hurts most.
How to read the result
Compare the ten-year totals, but look harder at the shape of the curve. A lower percentage that starts higher in flat charges is cheaper only above a certain revenue, and if your unit trades below that line the ranking reverses. Find that crossover revenue and ask honestly which side of it your unit is likely to sit on in year two, not year ten.
Questions about this tool
Is a lower royalty percentage always better?
No. A brand charging less may also be providing less in supply chain leverage, marketing reach or operational support, and it may recover the difference through required purchases or a mandatory ad fund. The total cost and what you receive for it both matter.
Are royalties charged on revenue or on profit?
Almost always on gross revenue, before your costs. That is why a small percentage difference has a large effect on a low-margin unit: it comes off the top regardless of whether you made money.
Should I include the initial franchise fee here?
Include it if you want the full cost of the term. It is a one-off, so it affects the total but not the slope — the recurring charges are what decide which structure wins over ten years.
For reference only; not legal, tax, or investment advice. Results depend entirely on the figures you enter — check them against your own quotes and your franchise agreement before acting on them.