Zero Royalty vs. Traditional Fast Food Franchise: Which One Should You Choose?

Choosing a fast food franchise or a zero-royalty food franchise is akin to choosing between a guided tour and a solo road trip. Both will bring you to your destination, but the experience (and the cost) will be totally different.

If you are planning to start your own business, here is the simple summary to help you decide which one may be a better fit for you.

What Is a Traditional Fast Food Franchise?

Traditionally, you pay to use the brand name of a big and famous company. For example, the giant burger or pizza chains that are present in every city.

• The Big Fee: You pay an initial cost to become a member.
• The Royalty: This is the “catch.” You have to hand over a percentage of your total sales back to the parent company every month (usually 4% to 10%).
• The Support: On the other hand, since they are making a monthly income off your business, they help you a lot with ads and training and even share their secret recipes with you.

What Is a Zero-Royalty Food Franchise?

A zero royalty food franchise is a type of business model that has been introduced more recently. You still get to use a brand name and their system, but you get to keep all the profit.

• Pay Once: You generally pay a one-time setup fee.
• Keep Your Sales: If you sell 1,000 worth of food, you keep the profit from that 1,000. You do not send a “tax” or royalty check to the brand owners.

More Freedom: Such brands usually allow you to have more control over how you operate your daily business.

Which Option Should You Go For?

Opt for Traditional When:

• You are looking for a “sure thing”: Big brands have a massive audience already. Folks will come in just because they recognize the name.
• You are inexperienced with cooking: Their very strict rules make it pretty much impossible for you to go wrong.
• You have an ample budget: These are way more costly to start and run.

Go for Zero Royalty if:

• You wish to keep your expenses to a minimum: Saving on monthly fees translates directly to extra cash in your hands to expand the business.
• You are highly motivated: As these brands can be rather niche, you will have to handle more of your local marketing.
• You desire a fair arrangement: A lot of people believe that if they put in the effort, they should be the ones to enjoy the benefits.

Conclusion

A classic fast food franchise can be quite a safe bet and a way to get instant recognition, but it requires you to pay a high price that keeps going. Basically, you are “renting” a brand. A zero royalty food franchise, in contrast, is geared towards the modern business owner who wants to establish a future without having to give up a portion of every sale. It equips you with the necessary tools to launch but still allows you to enjoy the rewards of your work.

Little Tip: Whatever you do, don’t sign anything before checking your bank account. If you plan to expand quickly and still keep your profits, “Zero Royalty” is usually the wisest choice for new owners nowadays.