What percentage of gross income do franchisors typically receive from franchisees?

Franchisors typically receive a percentage of the gross income from franchisees as part of the franchise agreement. This percentage is usually based on the total revenue generated by the franchisee's business before any expenses are deducted, allowing franchisors to earn consistently as franchises grow and increase their sales. This model of compensation aligns the interests of the franchisor and franchisee, as the franchisor benefits from the overall success of the franchisee’s operations. By structuring the fees in this manner, franchisors provide incentives for franchisees to maximize their sales while maintaining a steady income stream for the franchisor.

Other options, like a fixed fee, would not vary with business performance and could be less motivating for franchisees to grow their revenue. Receiving a percentage of net income, on the other hand, complicates calculations, as net income can fluctuate significantly based on various expenses that a franchisee incurs, making it less stable for franchisors.