GGB Franchise royalty
The recurring percentage of franchisee sales paid to the franchisor. The stream a franchise model actually lives on.
The royalty is the ongoing percentage of net sales a franchisee pays for the brand, the system and continuing support. It is charged on sales, not profit, so a royalty the unit economics cannot carry will quietly sink the franchisees the brand depends on. Sustainable systems set the royalty from proven unit P&Ls, then defend the standards that keep those P&Ls true.
Royalty = franchisee net sales × royalty rate
Charged on net sales regardless of the unit's profitability; marketing levies are usually additional.
Illustrative: a 5% royalty on AED 150,000 of monthly net sales is AED 7,500 a month, AED 90,000 a year from one unit. The franchisee's P&L has to absorb that as a permanent operating line, which is why the franchisor's model must be proven at unit level first.
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