Advertising fee
A mandatory contribution paid by franchisees into a common fund to finance network-wide communication: national advertising, marketing tools, and brand-awareness activities. It is distinct from operational royalties.
In practice
The advertising fee typically represents 1 to 3 percent of the franchisee’s net revenue. Its use must be transparent: well-run networks publish an annual breakdown of expenditure. An advertising fee without detailed reporting is a frequent source of tension between franchisees and the franchisor. Franchisees have a legitimate interest in how funds are spent, typically represented through a franchisee committee or association.