what does royalty income mean
Royalty income is usually the real profit center for a franchisor because of the leveraging ability. For example, imagine a franchise company owns 100 franchised outlets, and each outlet does $30,000 in monthly sales and pays a 5% royalty to the franchise company. That means $1,500 is paid by each franchisee, resulting in $150,000 paid to the franchisor each month (or 100 outlets x $1,500).