Buy the brand, or just the system?
A franchise bundles two things: a system (the model, the plan, the suppliers, the training) and a brand, for a $30,000 to $50,000 fee and 4 to 12% of revenue for ten or twenty years. Where customers come because of the sign, the brand can earn that. Where they come for the work, the system is what you need, and you can now have it without the fee. Here is how to tell which you are looking at, with the sources.
What you actually pay
Royalties are quoted as a share of revenue, which sounds small. Owners live on profit. On a business that keeps 21% of revenue (the median owner-earnings margin across our 156 models, before the owner’s own pay), an 8% royalty and ad fund is 38% of the owner’s earnings, every year, before the approved-supplier markups and the transfer fee when you sell. Put your own numbers in.
- Initial fee: typically $30,000 to $50,000, mostly compensation for the sale itself.
- Royalty: 4 to 12% of gross revenue, owed whether or not you made money that month.
- Ad fund: 1 to 4% of revenue, spent where the franchisor decides.
- Approved suppliers: you buy what they approve, at their price; rebates often flow to the franchisor.
- Term: 10 to 20 years, with a renewal fee and an agreement that can end the business.
On $600,000 of revenue an independent owner keeps about $126,000. A 8% royalty and ad fund takes $48,000 of it a year, $480,000 over a ten-year agreement, before approved-supplier markups and the transfer fee when you sell. A brand can lift revenue; this is what the fee costs before any lift.
Who is selling it to you
The “consultant” who matches you to a franchise is usually paid by the franchisor when you sign, often most of the initial fee. In May 2026, state securities regulators adopted a model act requiring franchise brokers to register and disclose how they are paid, because candidates could not tell whose side their advisor was on.4 We are not paid by franchisors, we never take a cut of a deal, and when a software listing on this site pays a referral fee, it says so on the listing.
When the franchise earns its fee
A brand earns its royalty where customers walk in because of the sign: fast food, hotels, auto service, some fitness and childcare. In those categories the franchise can be the right door, and our model pages say so. In most of the rest, home services, trades, cleaning, laundromats, most professional and personal services, customers choose on proximity, reviews and price, and what you need is the system, which you can have without the fee. If a franchise is the better fit for you, the franchise listings show the investment, fees and royalty up front, and the tools let you test the numbers before you sign; have a franchise attorney read the disclosure document.
Why now
- 1.2 million announced job cuts in 2025, up 58%, with planned hiring at a fifteen-year low.5 Corporate refugees are already 42% of the people buying small businesses, and more than half of buyers have never owned one.3
- 5.7 million Americans filed to start a business in 2025.2 Franchising added about 12,000 units.1 Most of the rest started without a system of any kind.
- About 6 million small businesses will change hands by 2035; today 92% of exits end in closure, not a sale.6 The constraint is capable first-time owners, not supply.
- Roughly half of new businesses survive five years.7 The avoidable failures happen before the first dollar is spent: the wrong business, the wrong numbers, the wrong lease.
What we sell instead
- Sourced economics for 156 kinds of business: what one unit earns, what kills the margin, what it resells for, with its sources listed or its estimates labeled.
- A launch plan for each, with your own numbers beside it: a projected P&L, the cash to open, the month it carries itself, and the four or five things that need to be true for it to make money.
- The vendors to run it, without an approved list or a markup, and the tools to size the loan, the lease and the first hire.
- Membership: $99 for your first 3 months, then $29 a month, or $199 a year. No royalty. The business is yours.
Sources
- International Franchise Association, 2026 Franchising Economic Outlook: 845,000 establishments, 8.9 million jobs, $921 billion of output; about 12,000 new franchised businesses expected in 2026.
- U.S. Census Bureau, Business Formation Statistics: 5.67 million business applications in 2025, 1.71 million of them high-propensity.
- BizBuySell, Who is buying businesses (2025): 56% of buyers have never owned a business; corporate refugees are 42% of buyers and the recently unemployed 13%.
- NASAA, May 2026: the Model Franchise Broker Registration Act, adopted so that prospective franchisees know how the broker advising them is paid.
- Challenger, Gray & Christmas, 2025 year-end report: 1,206,374 announced job cuts, up 58%; planned hiring the lowest since 2010.
- McKinsey Institute for Economic Mobility, The Great Ownership Transfer (2026), via Fortune: about 6 million small businesses changing hands by 2035; 92% of exits today end in closure.
- U.S. Bureau of Labor Statistics, Business Employment Dynamics: about half of new employer establishments survive five years.
Franchise fee and royalty ranges are the typical terms disclosed in franchise disclosure documents (Items 5 and 6) across the categories our models cover; a specific system can sit outside them. Read the FDD for any franchise you consider, especially Items 7, 19 and 20.