Our Fitness Blog
FRANCHISING 101: From the Founder and CEO of 9Round - 30 Min Kickbox Fitness
What is a royalty payment for?
If you are not familiar with the Franchising Industry, a common question might be, "What is a Royalty payment for?" Drum roll please..................A royalty is a payment the franchisee (or owner) pays to the corporate office for ongoing support. Sometimes royalties are collected weekly, monthly, or even annually. The corporate office of a brand has to constantly monitor each franchise operation to make sure the brand is not being compromised in any way. Corporate offices are watching to see if locations are using the proper equipment, have exceptional customer service, they are providing support calls, and even do on-site visits to make sure location are clean and up to standards.
Can you imagine having to monitor over 1000 locations?! Wow, what an exhausting job! How about 40,000 locations like Subway or a McDonalds?! It takes a massive effort and team to deliver that kind of demanding support. A corporate office has expenses just like any other business. They have rent, salaries, employer taxes, and utilities just like everyone else.
How much is a royalty payment. Each brand has a different fee structure, but most charge anywhere between 3%-10% of gross sales. For example, if a franchised location does $10,000 in sales, and the royalty is 5%, then the royalty payment would be $500 for that month. Now the million dollar question is, IS THAT FAIR??? Well here's my professional opinion. HECK NO, it's not fair!!! From experience, the franchise owners that do the best need the least help and support. I'm not saying they GET the least support, they are just good at what they do and don't need much help. And in my company, it's just not fair that the best operators pay the most. It's like being punished for being good. That stinks in my opinion. That's like being punished for having good grades in school. That's like making more money than your neighbors and having to pay more taxes right? Wait a minute, it is like that. Oh well, I don't want to get into politics, let's stay on Franchising.
With 9Round we have rectified that unfair franchise practice by offering a flat fixed royalty of only $449 per month. We feel that we give each owner a great supportive environment to grow and have a successful business and they should all pay the same amount. Other things we offer for support include, but are not limited to:
1) A dedicated Franchise Account Manager that's available 9am-5pm Monday through Friday.
2) A Online Franchisee (club owner) secure website with advertising material, ops manuals, build-out instructions, architectural drawings, sales and phone scripts, how to fire, how to hire, and over 180 workouts for the club owner to use.
3) A monthly Newsletter with tips and tricks and sales techniques
4) A High Energy- fun Yearly Convention
5) Each location has their own Website that is branded and they have the power to customize
The success of our company is dependent on the success of each individual 9Round location. 9Round's goal is to give top notch franchise support for a fair royalty fee. Business should be a win/win for everyone involved. If you are interested in bringing 9Round to your town visit www.9Round.com and click on the franchising tab. Are you ready to get your town FIT, 9Rounds at a Time???