As with most store-based franchises, Party Plus franchisees pay monthly royalties and fees based upon Turnover. These fees are:
- The monthly Continuing Franchise fee is 5% of monthly turnover
- The monthly Marketing Levy paid to Franchisee Marketing Fund is 3% of monthly turnover.
What is the continuing Franchise Fee – how is it different to the Franchise Fee?
Before we answer that, it’s important to recognise that all related parties to a franchise system deserve a good deal – customers, franchisees, suppliers, franchisor. Certainly franchisees and franchisor have gone into business to make a fair return on capital, time and “sweat equity”, and they expect a return either immediately or over time.
As with other a successful franchises, the Party Plus business system is based upon a proven model that has been trialled, tested, modified and constantly updated over a number of years. The franchisor has invested significant sums into that development and continues to expend sums to protect and expand the brand.
Like most franchisors, we know that if we ask new franchisees to pay in advance for the full development cost of the franchise, as well as the initial and ongoing training and support, updating of systems and procedures, compliance visits, conferences, franchise meetings, one to one meetings with support staff etc, no-one would be able to afford a franchise.
We therefore structure franchise fees as a part payment up-front (the Initial Franchise Fee) followed by a Continuing Franchise Fee for the duration of the franchise agreement (10 years).
What is the Marketing Levy used for?
This is used entirely for network-wide franchise promotion, marketing and advertising, and is administered by the franchisor. Typically this will be spent on network-wide telephone numbers (eg 1300 numbers), websites and online marketing, print media (eg Yellow Pages), and one-off promotions or campaigns.
Marketing Funds have a bad name within some franchise systems, and there can be a perception that the franchisor is not spending these funds for the benefit of franchisees. While Marketing Levies are technically “income”: to the franchisor, in Party Plus we recognised this potential for dispute many years ago. That’s why our Marketing Fund and processes are fully transparent - we operate separate bank accounts and bookkeeping records which may be inspected by franchisees at any time (with reasonable notice).
Are there any other fees?
On occasion the franchisor will see an opportunity to embark upon a specific marketing campaign that cannot be met by existing Marketing Funds. In such cases the franchisor will request franchisees join with them in funding such an opportunity.
Of interest, we did this with an initial television campaign in 2006. Franchisees showed such a good return on their additional investment that this has been followed up with subsequent campaigns, again funded by franchisees.
We strongly encourage Party Plus franchisees to be members of professional and local community associations, to engage in their own personal and business development, and to conduct local area marketing initiatives. However there are no other fees are payable to the franchisor.
