Royalties & franchise fees
Franchise royalty and fee reporting you can rely on.
Royalty and marketing levy calculations, reconciliations to actual sales and the reporting your franchisor expects — checked against what your franchise agreement actually says.
What is a franchise royalty?
A franchise royalty is the ongoing fee a franchisee pays the franchisor for the continuing right to use the brand, systems and support. It is usually calculated as a percentage of gross sales — as defined in the franchise agreement — or as a fixed weekly or monthly amount. Most networks also charge a separate marketing levy paid into a marketing fund. Royalties and levies are generally deductible business expenses for the franchisee and carry GST if the franchisor is registered.
Why it matters
Small errors, every week, add up.
Royalties are usually calculated on a definition of “gross sales” set out in your franchise agreement. Whether that figure includes or excludes GST, delivery platform fees, gift card sales, refunds, discounts and staff meals can change the amount you pay — and an error repeated every week compounds quickly.
We read the fee clauses in your agreement, map them to your POS and accounting data, and reconcile what you’ve been charged against what you should have been charged. Where franchisors invoice by direct debit from POS data, we make sure the amounts recorded in your books match.
For franchisees
What we check.
Sales definition
Whether your sales base matches the agreement — GST, refunds, discounts, third-party delivery, gift cards.
Rate and thresholds
The correct percentage, minimums, tiers or fixed amounts for each period and site.
Levies and funds
Marketing, technology and local area marketing contributions charged at the agreed rates.
GST and coding
GST on franchisor invoices claimed correctly; royalties coded separately from other charges.
For franchisors
Royalty reporting at network scale.
For a franchisor, royalty income is the engine of the business. We help design the reporting process from franchisee sales data to invoicing and reconciliation, so income is complete, disputes are rare and the numbers in your management accounts and disclosure document can be relied on.
If you operate a marketing fund, the Franchising Code requires an annual marketing fund financial statement for franchisees and, unless enough franchisees agree otherwise, an auditor’s report. We can prepare the statement and the supporting records. Source: ACCC.
Invented figures for illustration. Your agreement’s definitions apply.
Royalty FAQs
Royalty and fee questions
How are franchise royalties recorded in the accounts?
Usually as an operating expense in the period the related sales occur, separate from marketing levies and other franchisor charges, with GST recorded on the franchisor’s tax invoice. Accruing royalties for the sales period (rather than when they’re debited) keeps monthly profit accurate.
Are franchise royalties calculated on sales including GST?
That depends entirely on your franchise agreement’s definition of gross sales. Many agreements exclude GST, but you need to check yours.
What is a marketing fund statement?
Under the Franchising Code, a franchisor that runs a marketing fund must give franchisees an annual financial statement showing what was contributed and how it was spent, together with an auditor’s report unless franchisees agree otherwise.
Can you help if I think I’ve been overcharged?
We can reconcile what you’ve paid against what the agreement requires and document the difference. If there’s a dispute, a franchise lawyer can advise on the next steps.
Keep exploring
Related reading and services
Next step
Let’s make your numbers work harder.
Tell us where you’re at — first store, next store or a whole network — and we’ll start with the right conversation.