Setting Franchise Fees for Your Business in Ireland

Setting franchise fees is not simply a matter of copying another brand’s percentage. When you franchise an existing business in Ireland, your charges must fund a new responsibility: helping independent owners deliver your business model consistently. A sustainable franchise community needs fees that support both sides, with clear rules about what is included, when payments fall due and how charges may change.

1. Cost the support you are promising

Start with your service commitments, not your preferred income. List everything you will provide before opening and throughout the franchise relationship, then assign a realistic cost and responsible person to each activity.

Separate those costs into three groups:

• Initial delivery: candidate assessment, initial training, opening assistance and location approval where relevant.
• Recurring support: operational advice, field visits, refresher training, system maintenance and performance reviews.
• Network development: improving the business model, updating training materials and developing shared resources.

Include staff time, travel and external suppliers. Founder-led support is not free: calculate what it would cost to employ someone capable of delivering it.

Next, test your support budget against different network sizes. A small group of franchisees may require substantial central support before recurring fees cover it. Identify how you will finance that gap rather than relying on a continuous stream of new joining fees.

This exercise should produce a costed support plan, not a promise to provide unlimited assistance.

2. Give each fee a distinct purpose

An initial franchise fee normally covers the grant of franchise rights and an agreed package of start-up services. State precisely what is included. Travel, accommodation, additional trainees, equipment and premises costs should not be left for candidates to guess.

Recurring management fees or royalties can be calculated as a percentage of turnover, a fixed amount or another clearly defined method. Each approach creates different pressures:

• Percentage-based fees move with sales, but require a precise definition of turnover and reliable reporting.
• Fixed fees offer predictable payments but can weigh heavily on a franchisee during quieter periods.
• Minimum fees protect a baseline income for the franchisor but increase the franchisee’s downside risk.

If you earn income through compulsory product purchases, explain that commercial model alongside any separate royalty. Avoid making a low headline fee appear cheaper by obscuring other unavoidable charges.

Treat a shared marketing contribution separately. Explain its purpose, who controls spending, whether administration costs are charged to the fund and what reporting franchisees receive. Do not imply that each location will receive advertising expenditure equal to its contribution unless that is genuinely the arrangement.

3. Test affordability from both sides

Build a franchisee cash-flow model that includes every compulsory payment, not just the royalty. Add software, insurance, local marketing, stock, premises costs, staffing, finance repayments and an appropriate allowance for the owner’s work.

Test slower sales growth, weaker margins and higher operating costs. Percentage-of-turnover fees remain payable even when a franchisee makes no profit, so examine cash availability as well as the annual profit figure.

Then model the franchisor’s position. Can recurring income fund the agreed support when recruitment pauses? What happens if several franchisees need extra assistance simultaneously?

Ask an accountant to review both models and the VAT treatment of each charge. State clearly whether quoted fees include or exclude VAT, and account for payment timing. A fee that looks affordable annually may still create a difficult cash-flow pinch when collected upfront.

4. Put the calculation rules into the agreement

Ireland has no franchise-specific legislation, no general mandatory franchise pre-sale disclosure regime and no franchise-specific registration requirement. That does not remove the need for transparent charges or legally sound terms.

General Irish contract law applies, including principles concerning misrepresentation. Irish and EU competition law also matter, particularly section 4 of the Competition Act 2002, as amended. Compulsory purchasing arrangements and restrictions on resale pricing need specialist review. Consumer protection rules apply where relevant, particularly to customer-facing trading; do not assume a business purchaser has consumer-contract protections.

Have an Irish franchise solicitor translate the fee schedule into contractual terms covering:

• The turnover definition, including VAT, refunds, discounts and online sales.
• Reporting dates, payment deadlines and verification rights.
• Any minimum payments, introductory reductions or deferrals.
• How fee increases are calculated and notified.
• Renewal, transfer, additional training and other contingent charges.

Voluntary association codes may create membership commitments, but they are not statutory franchise disclosure laws.

5. Present the whole cost before commitment

Give candidates a consolidated fee schedule early enough for independent legal and accounting advice. Match it to the agreement and recruitment materials. Explain any deposit, its purpose, when it becomes non-refundable and what happens if either party withdraws.

Distinguish charges you control from third-party estimates. Record the version supplied and resolve questions in writing before signing.

Practical takeaway: finalise your fees only when you have a costed support plan, a stress-tested franchisee budget and a solicitor-reviewed schedule explaining every compulsory payment.