Costs under a Franchise Agreement The Franchisee needs to carefully consider the additional operational costs associated with running a franchised business. In the development of any business plan, it is essential the Franchisee grasp a complete understanding of those costs because those cost will ultimately eat into the profit margin. We frequently deal with Franchisees who have signed complex agreements without obtaining legal/accounting advice or understanding their true cost obligations. Accountants advising Franchisees may be asked to give certificates of advice to a Franchisor. We would recommend that such a certificate only be given after a thorough and rigorous budgeting and income a
Franchisees should be aware that in many cases the Franchisee is required to contribute to a marketing fund in addition to paying Franchise fees and also in addition to the payment marketing fund fees under a lease. Typically a contribution to a marketing fund is 2% to 5% of the Gross sales or a minimum amount. A Franchisee may also be required to contribute a marketing fund under a lease of about 2%-4% of the yearly rental. The way in which the Franchisor deals with the marketing fund is entirely at the discretion of the Franchisor. The Franchisor is usually not obliged to spend any part of the fund on marketing the Franchisee’s particular business. The fund may be spent promoting the brand
The amount of empty commercial space out there is overwhelming. There are about 395 vacant spaces in the Townsville CBD/4810 area alone according to a leading commercial lease website. I can understand the caution displayed by office tenants and the need to cut office space to lower overheads. It is commercially prudent to grow the business before commitments are made to lease more space. The problem is not overbuilding but the cyclical downturn in demand following the GFC. Added to this is the relocation of major financial and insurance services players from the Townsville CBD and its centralisation to Brisbane/Sydney/Melbourne. But the capital cities are not immune either. Office Vacancy r
