Fast-food restaurants and auto lube joints, for example, greatly benefit from their association with the brand name franchises. That might not hold true, however, for a car wash or mail order business. But some is not all. You might pay much more for a franchise affiliated with a nationally known big chain. Franchisors generally charge royalties from 3 percent to 6 percent of each franchisee's revenues.
Some firms charge significantly more, though, and others charge flat fees on an ongoing basis.
This is a critical number to know. The franchisor's projections probably are optimistic. You must, therefore, run them by other franchisees and your accountant. Buying a franchise is a long-term investment, so you had better be able to work with your new associates in the home office. Make sure to visit it, even if it's in a different state.