Royalties that leave room for wages

Royalty design sits at the uncomfortable centre of franchise system design. Charge too little and you cannot support franchisees; charge too much and owners cut hours until service collapses.

Stress-test a soft quarter

Take a quieter three months from your own books — or construct one from regional norms — and apply the proposed royalty and marketing levy after rent and core labour. If the model only works in December, it is not ready for a provincial grant.

Separate brand marketing from survival labour

Marketing levies should buy visible local support. They should not be the line item that forces a franchisee to drop a closing shift. Be explicit about what the levy funds and what remains the owner’s local choice.

Revisit after the first two grants

Your first franchisees will teach you where support calls cluster. Adjust levies and support hours with transparency rather than freezing a number that looked neat in a pitch deck.

Fees are not a vanity metric. They are a promise that the network can afford both a head office and a fair roster — in the towns you actually want to enter.