Franchise minimum fee calculator
By Scott Engler · Averan Advisors · Updated 3 October 2026
Many franchise agreements charge a royalty as a percentage of sales with a minimum dollar amount each month. Below a certain level of sales, the minimum costs more than the percentage. This calculator finds that level and shows what you pay at your own sales.
The calculator
| Monthly sales | Royalty paid | Royalty as a share of sales | All fees | All fees as a share of sales |
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How the numbers are worked out
- The royalty you pay is the larger of two amounts: your sales times the royalty rate, or the minimum.
- The minimum stops applying when sales times the rate equals the minimum. That level of sales is the minimum divided by the rate. A $3,000 minimum at 6% stops applying at $50,000 of monthly sales.
- Below that level, the royalty as a share of sales is higher than the stated rate. At $40,000 of sales, a $3,000 minimum is 7.5% of sales on a 6% royalty.
- The brand fund works the same way when the agreement sets a minimum for it.
- Flat monthly fees, such as technology fees, are added at the same dollar amount at every level of sales.
Where to find your numbers
The royalty rate, any minimum and the brand fund rate are in Item 6 of the Franchise Disclosure Document (FDD), the document every franchisor gives a buyer before signing. Item 6 lists the fees paid after opening. Some agreements raise the minimum after the first year, so check the year your location is in. Our fee disclosure guide explains how Item 6 is laid out, and each brand page lists the fees that brand discloses.
What the result means for a new location
A new location usually opens below its long-run sales. During those months the minimum sets the royalty, so the share of sales going to fees is higher than the stated rate. Plan cash for the months between opening and the sales level where the minimum stops applying. The franchise tools page has a 13-week cash forecast for that period.
Common questions
When does a minimum royalty stop costing more than the percentage?
When monthly sales reach the minimum divided by the royalty rate. A $3,000 monthly minimum on a 6% royalty stops applying at $50,000 of monthly sales.
Where is the minimum royalty listed?
In Item 6 of the Franchise Disclosure Document, which lists the fees paid after opening.
What is the effective royalty rate?
It is the royalty you actually pay divided by your sales. Below the level where the minimum stops applying, it is higher than the stated rate.