What are franchise fees?

When franchise royalty fees are a percentage they are usually based on sales because it’s an easier calculation for the Franchisor to make versus taking a percentage of profit. However, it’s important to consider the cost of sales when deciding whether to pursue a franchise opportunity to ensure you’re still going to be left with an acceptable amount each month after paying your fees.

Another ongoing fee called a National Marketing Levy (NML) (also referred to as an Advertising fee) is common and charged either as a small percentage of sales (usually between 1-4%) or a fixed amount. This fee is used to promote the franchise system as a whole, rather than just your location, and includes regional/national advertising campaigns, promotions or special marketing initiatives.

There may be other fees which you might be subject to as a Franchisee, such as renewal or transfer fees at the end of your contract term or fees for software licenses (sometimes referred to as a Technology fee).

Average ongoing fees

Franchise fees can vary wildly from franchise to franchise, ranging from nothing up to 20% of sales. The average is 7-8%. If the ongoing royalties are nil that doesn’t necessarily mean the franchisor won’t take any money from the franchisee, they may just take that money in mark-ups on products/services that the franchisee purchases from them.

A low ongoing royalty charge is not necessarily an advantage to a franchisee, the ongoing fees are usually directly proportional to the amount of support that a franchise will provide to their franchisees. Plus, it is crucial that the franchisor retains an ongoing interest in promotion and improvement of the business format, and that will only be achieved by the reliance on some sort of continuing payment from the franchisee.

It’s worth checking with the franchise that you’re interested in what the arrangement is when it comes to renewal of the Franchise Agreement – some will increase the monthly fees if you renew which is not ideal.

PGH Beegone fees

PGH Beegone franchisees pay their ongoing fees as a percentage of sales on a monthly basis. Owner Operator franchisees give 15.5% of sales on a monthly basis and Management Owner franchisees contribute 13.5% – the reason for this difference is because the Owner Operator will receive a higher level of support on a continuing basis, being a one person operation. There is a fixed minimum amount to pay on the PGH pest control jobs which is £666 per month in year one, £1000 in year two and £1333 in year three onwards for an Owner Operator or £1333 per month in year one, £2000 per month in year two and £2666 per month in year three onwards for a Management Owner – you pay either the minimum amount or the percentage, whichever is higher. These minimum amounts do not apply on the Beegone Live Bee Removal jobs – just the percentage.

There is a 2.5% NML to pay on a monthly basis which covers all promotion for the brand on a national level plus local SEO which we will do for you. This money goes into a separate pot and we are accountable for being able to clearly show where it has gone.

In the initial outlay for a PGH Beegone franchise you get a software package, covering a CRM, accountancy and quoting software, in which all licenses are covered for the first year. After year one to continue with those licenses (which we arrange and renew for you) there is a Technology fee to pay monthly which is £211.50 for an Owner Operator and £518 for a Management Owner – this is passed on at cost to franchisees with no mark up.

What do you get for your ongoing fees?

In general, franchise royalties will cover the support which the Franchisor provides to the Franchisees and the Franchisee’s continued ‘membership’ of the franchise club.

More specifically the PGH Beegone fees include, but are not limited to, the following: updating the System and Operations Manuals as necessary, provision of a professional and well-structured ongoing training programme, dedicated franchisee point of contact and technical helpline facility, telesales support, 24/7 call answering system, website development, business coaching, regular visits, continual research to keep abreast of developments in the marketplace, group meetings / conferences (online and in person) that will bring you together with other franchisees to exchange ideas and best practice as well as regular advice and guidance on any necessary improvements.