Question

Advertising fees that franchisees have to pay the franchisor are typically less than___percent of gross income.

a) 1
b) 2
c) 3
d) 4
e) 5

Answer 1

Advertising fees that franchisees pay are typically below 4% of their gross income, and they are used to support promotional activities for the entire franchise network.

• The question pertains to the marketing costs that franchisees are required to pay to their franchisor as a percentage of their gross income.
• In the franchising industry, these fees are known as advertising fees or marketing fees and are used by the franchisor to fund promotional and brand activities that benefit the entire franchise network.
• Typically, advertising fees that franchisees have to pay are computed as a percentage of the franchisee's gross income.
• While the exact percentage can vary based on the franchisor, industry standards, and the terms of the franchise agreement, it is generally less than 4% of the gross income.
• Therefore, the correct answer is d) 4%.