FDD-sourced. No franchisor pays to rank here.

FranPicks

Ranked by ongoing royalty

The lowest-royalty franchises

The franchise fee is paid once. The royalty is a slice of every dollar you ring up, for the length of the agreement. Ranked by disclosed royalty percentage, lowest first.

Photo via Pexels

  1. McDonald's Royalty: 4% royalty
  2. Popeyes Royalty: 5% royalty
  3. UFC Gym Royalty: 5% royalty
  4. The UPS Store Royalty: 5% royalty
  5. Taco Bell Royalty: 5.5% royalty
  6. Great Clips Royalty: 6% royalty
  7. Little Caesars Royalty: 6% royalty
  8. Smoothie King Royalty: 6% royalty
  9. Wingstop Royalty: 6% royalty
  10. Jersey Mike's Royalty: 6.5% royalty
  11. Planet Fitness Royalty: 7% royalty
  12. Subway Royalty: 8% royalty
  13. 7-Eleven Royalty: 18% royalty

Why the royalty outweighs the fee

Upfront costs are finite and mostly one-time. The royalty is neither. A brand charging 8% of gross sales for a 20-year term can quietly cost far more than a higher-fee brand charging 4%, because the royalty scales with your success and never expires. Do the arithmetic on a store doing a million dollars a year: four points of difference is $40,000 a year, every year, before the ad fund. Over a typical agreement that gap dwarfs almost anything you'd save on a cheaper build-out.

That's why a low royalty is worth more scrutiny than a low sticker price for anyone planning to hold the business. It's the cost that compounds, and it's charged on gross revenue, not profit, so you pay it whether the location makes money that month or not.

A percent symbol beside stacks of gold coins and a phone showing a chart
A royalty is charged on gross sales, not profit. Two points of difference on a busy location is real money leaving every month, for the life of the agreement. Photo via Pexels

Read the whole Item 6, not just the headline percentage

This ranking sorts on the standard royalty on gross sales, but that line rarely travels alone. Most agreements also carry an advertising or brand-fund contribution, often another one to four percent, plus technology fees, and sometimes local-marketing minimums you spend yourself. Brands with a non-standard structure, a flat monthly fee, or a profit-share instead of a percentage of gross, are left off this list because they can't be compared on the same axis; their real arrangement is on their individual pages. Add every recurring line together before you call one brand cheaper to run than another.