Franchise Royalty Rates and Fees: 259 Disclosure Documents by Sector (2025 to 2026)

Franchise royalty rates by sector, 2025 to 2026

The sector benchmark table is the core of this index. Each row reports the median and interquartile range (the middle half of FDDs) for the standard royalty, the brand or advertising fund and the initial franchise fee, with the number of FDDs behind each figure. Royalty and ad fund statistics use only FDDs that charge a percentage of sales; flat, per-room and other structures are counted in the structure table further down.

Sector medians cluster tightly. Food and beverage (5.5%), lodging (5.25% of room revenue), retail (5.4%) and senior care (5%) sit at the low end; business services (8%) sit highest. Lodging brand funds are the largest (3% median), and retail initial fees the lowest ($27,250 median).

With 17 to 27 brands per sector, sector medians carry wide uncertainty. Read the sector rows as indicative ranges, not precise averages.

The brand-level dataset

Every row below is one franchise brand and one filed document. Values are recorded as the FDD discloses them, for the standard single-unit offering, and each row links to the PDF on the Minnesota Department of Commerce CARDS system. Sort any column to compare brands. The full file, with the royalty schedules, minimums, ad fund ceilings and the list of recurring fees for each brand, is in the CSV download.

The table records whether Item 19 is present, not what it says. Franchisors may give financial performance information only through Item 19, under the FTC Franchise Rule.

How royalty, ad fund and initial fee are distributed

The royalty distribution is narrow. Of 239 percentage royalties, 86.2% were between 4% and 8% of sales and the 10th to 90th percentile range ran from 5% to 8%. Several of the highest rates, 15% to 25%, come from service brands where the franchisor bills customers or collects revenue on the franchisee’s behalf.

Brand funds are smaller: the median percentage fund was 2% and the middle half ran from 1.33% to 2%. 32 FDDs reserved the right to start a fund without charging one yet, 21 had none and 18 charged a flat dollar amount.

Initial fees cluster at round numbers. The median single-unit fee was $49,500, $50,000 was the most common fixed fee (31 FDDs) and the middle half ran from $35,000 to $59,975.

How franchise royalties are structured

Most royalties are a percentage of gross sales or gross revenue, but fewer than half are a single fixed rate. 116 FDDs (44.8%) charge one percentage. 86 (33.2%) charge a percentage or a dollar minimum, whichever is greater, and 37 (14.3%) use a tiered or stepped schedule. Flat dollar royalties (5 FDDs), other bases such as per room or a share of collected commissions (9) and no royalty at all (6) are rare.

Minimums matter more than the type label suggests. 104 FDDs (40.2%) set a minimum royalty somewhere in the agreement, often starting after a ramp-up period. Where the minimum is stated in dollars, the median was $16,980 a year and the middle half ran from $7,862 to $25,150. A minimum turns part of the royalty into a fixed cost in slow months.

Three hand-checked examples show the range. BOR Restoration charges the greater of 7% of gross sales or a monthly minimum that rises from $500 in year 1 to $2,000 from year 3. TEGG charges 4.5% on the first $700,000 of gross revenues, stepping down to 2.5% above $2,800,000, with annual minimums rising from $34,800 to $67,200. The Tutoring Center charges a flat $1,500 a month after its first 3 months. Each link opens the filed FDD.

Does the headline royalty predict the total fee load?

The brief’s working hypothesis was that royalties sit in a narrow band while the full recurring fee load varies far more. The data support half of that. Percentage fees do not spread out much once they are added together; fixed-dollar fees do.

Adding the percentage ad fund and any other percentage-of-sales fee to the royalty raises the median from 6% to 8% of sales. The middle half shifts from 5% to 7% up to 7% to 9%: the same 2-point width. The 10th to 90th percentile range widens only from 3.0 to 4.26 points. 14 FDDs with a flat-dollar ad fund are left out of this sum.

Fixed-dollar charges are different. Technology fees, software licences, call centers, conferences and similar items listed in Item 6 total a median $5,500 a year at the low end of each stated range, but the middle half runs from $2,180 to $11,346 and 72 FDDs list $10,000 or more. On a unit-free spread measure, the quartile coefficient of dispersion, fixed fees score 0.68 against 0.17 for the royalty rate and 0.12 for the percentage load.

Fixed fees also fall harder on smaller outlets, because the same dollar amount is a larger share of lower sales. That share cannot be computed here without assuming sales levels, and this report does not do so. 139 FDDs (53.7%) also list recurring fees charged per transaction, per user or at a variable amount, which no annual total can include.

Fee stacking: what else franchisees pay every month

Beyond royalty and ad fund, the median FDD lists 3 recurring fees in Item 6, and 59.8% list 3 or more. Technology is the most common: 226 of 259 FDDs (87.3%) list a recurring technology, software or POS charge, with a median low-end amount of $4,800 a year. Annual conference or convention fees appear in 60.6% of FDDs, required software from a designated vendor in 27.0%, and call center or booking services in 13.9%.

These counts are a floor. Item 6 covers fees paid to the franchisor or an affiliate, or collected for a third party; fees a franchisee pays a supplier directly, such as telephone and internet service, belong in Items 7 or 8 instead, according to the FTC Compliance Guide. Required local advertising spend, stated in 123 FDDs as a percentage of sales (median 2%), is reported separately because it is spending, not a fee.

Technology fees also featured in the FTC’s 2024 review: franchisees reported rising payment processing and technology fees, and FTC staff said that collecting a fee not disclosed in the FDD may be an unfair practice.

The initial fee as a share of the total investment

The initial franchise fee is a small part of most Item 7 budgets. Across 259 FDDs it was a median 16.8% of the low investment estimate and 7.6% of the high estimate. The median Item 7 range ran from $240,800 to $534,730.

The share is highest in service models with little build-out: the median fee was 62.9% of the low estimate in business services, 49.8% in senior and in-home care and 46.4% in home services. It was lowest in lodging (0.7%), entertainment and recreation (7%) and food and beverage (7%), where construction dominates the budget. For the general cost picture, see franchise costs; for capital requirements, see franchise affordability.

What the rules require franchisors to disclose

Every number in this index comes from three Items of the FDD. Item 5 discloses initial fees paid before opening; Item 6 must list, in a table, every other fee paid to the franchisor or its affiliates or collected for a third party, with any formula and the maximum or formula for any increase; Item 7 gives the estimated initial investment, according to 16 CFR 436.5.

Undisclosed fees have drawn regulators’ attention. Washington’s Department of Financial Institutions stated in November 2023 that a franchisor cannot impose a fee through the operations manual without first disclosing it in the FDD. FTC staff took the same position in July 2024 guidance, which says it reflects staff views and does not bind the Commission; it was still listed on the FTC franchise guidance page on 2026-10-05. The FTC consumer guide notes that royalties may be owed even when an outlet is losing money.

For how franchisors earn revenue from these fees, see how franchisors make money. This page reports disclosed terms only. It is not legal, tax or financial advice, and it does not rank or rate any brand.

What a Minnesota sample can and cannot show

Minnesota requires a registration statement before a franchise is offered or sold in the state, unless an exemption applies (Minnesota Statutes 80C.02), and publishes the filed FDDs. The index found 4,380 documents typed Clean FDD with titles dated January 2025 to October 2026, covering 1,694 franchise file numbers. FTC staff estimate about 4,000 franchise sellers nationally (Federal Register, May 2026). File numbers and franchisors are different units (one franchisor can register several brands), so the two counts are not a coverage ratio.

The sample is stratified, not proportional: each sector was capped at 18 brands (27 for food), so food, the quota that filled first in the random pass, is under-represented relative to the Minnesota frame and smaller sectors are over-represented. The All sectors rows describe this sample, not a weighted national average. Franchisors that do not sell in Minnesota, or that rely on an exemption, are not in the frame. FDD terms describe new agreements; existing franchisees may be on older terms.