Franchise Fee and Royalty Calculator

Six per cent royalty and two per cent marketing on four hundred thousand of turnover is thirty-two thousand a year.

At a fifteen per cent net margin, that is fifty-three per cent of the profit.

The fee is quoted against turnover because turnover is the biggest number in the business. It is paid out of net profit, which is among the smallest. Converting between the two is the whole of this page, and it is a division that is almost never done before somebody signs — which is why so many agreements look survivable on the brochure and do not feel that way in year two.

Put the royalty, the marketing levy and anything else charged on sales in together, because that is how they arrive.

There is one line worth carrying around without a calculator: you can pay away as many points of turnover as you make points of margin, and not one more. At a fee rate equal to your margin the profit is exactly zero. On a fifteen per cent margin that ceiling is fifteen per cent of sales; on an eight per cent margin the same eight per cent of fees takes every penny.

The table shows the same fee against every margin, which makes the other half of the point: the arrangement that is comfortable for a business making thirty per cent is fatal for one making eight, and the fee on the contract is identical.

Use your net margin, not your gross one. Gross will tell you the arrangement is comfortable when it is not.

What the brand is worth is not on this page. A franchise buys recognition, a system, buying power and customers who would never have found you, and those are real things that no arithmetic here can see. What the page can tell you is how much they have to be worth before the arrangement pays — which is a fairer question than the one the brochure asks, and a harder one to answer with a feeling.

It gives no opinion on whether to sign, and makes no claim that a franchise is safer or riskier than trading under your own name.

Save as many versions as you like and put any two side by side, figure against figure, with the better one on each line marked and the difference in its own column. That screen is the one that decides things, and it is the part a free calculator cannot do at all. Two franchises with the same headline royalty can be very different once the levies and the required spends are in.

One HTML file. No account, no subscription, no internet needed. Opens on Windows, Mac and Android; the readme explains the extra step on iPhone and iPad, where Apple blocks JavaScript in downloaded files and every tool of this kind is affected.

Everything lives in your browser on your device. Nothing is uploaded, which is why it works offline and why nobody else can see your figures — and it also means clearing your browsing data deletes it. The tool does not pretend otherwise: the header shows how long since your last export at all times, turns amber after three days and red after seven, and export is one click that produces a plain file you keep.