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Check regular and event-based charges
The table covers fees paid to the franchisor or affiliates, or imposed or collected for third parties. The actual offer may include technology, training, audit, transfer or renewal charges as well as royalties; it does not follow that every brand charges each one.
For a percentage of gross sales, read the contractual sales definition. It may differ from cash collected or accounting revenue. Where a fee may increase, the disclosed increase formula or maximum matters too. Keep fees distinct from independent taxes.
A percentage needs a defined base
Fictional example: a 6% royalty on a contract-defined monthly sales amount of $10,000 is $600. That answers one fee line. Add the actual technology and event-based charges separately, and use their payment dates when considering cash needs.
Scope
- This explains the selected federal disclosure item. State and territorial requirements and the terms of the particular offer remain separate.
Next step
Read each fee’s base, due event and increase terms before using the royalty percentage in the operating budget.
Sources & review notes
Federal Franchise Rule
FTC overview · Compliance Guide · Guide PDF · Current regulation
Federal Trade Commission
Passage, dates and research notes
primary · Item 6: Other fees
all other fees that the franchisee must pay to the franchisor or its affiliates
Current substantive item read in full from current eCFR. This guide explains selected management implications; it is not a substitute for all prescribed disclosure text.
Federal Trade Commission
Passage, dates and research notes
primary · section-436.6
Respond fully to each disclosure Item.
Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.
Detailed rule records (1)
Item 6 uses a table for fees paid to the franchisor or affiliates or imposed or collected for third parties, including amount or formula, due date and explanatory conditions. Royalties are only one line: transfers, renewals, audits, training and technology may matter.
16 CFR §436.5(f): FDD Item 6Keep this reading in your learning library.
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