Field guide
Asking better fee questions
Headline franchise fees are only the start. To avoid surprises, you need to check every fee, cost and add-on before you sign a franchise agreement.
Why fee surprises hit buyers
New franchise owners often focus on the upfront fee and miss ongoing costs that only appear after opening. These can include monthly royalties, advertising levies, required technology fees, and costs for uniforms or stock. Some buyers start trading before realising how much cash the first months will burn.
Fees also vary by location. For example, a food outlet in Menlyn may need a backup power system for cold storage, or a higher cleaning bill if the lease requires strict hygiene standards. Licence costs for certain business types, like a business licence or a municipal Certificate of Acceptability for food, can also add up quickly.
What stands out in franchise fee reviews
We see many buyers who did not check how royalty percentages or marketing levies are calculated. Is it on gross sales, net sales, or cash received? The difference can be thousands each month. The Consumer Protection Act requires that franchisees receive a signed disclosure document at least 14 days before signing and gives them 10 business days after signing to cancel without cost, but some agreements have complex terms that can make costs difficult to understand.
CPA Regulation 3 says the disclosure document must list all fees, but some buyers only read the summary and not the full pack. Our team often spots territory fees (for exclusive areas), exit or renewal charges, and technology platform fees that buyers did not expect. For sectors like food, recurring costs for compliance, licences and extra staff (at the national minimum wage or higher) are a major line item.
A buyer finds a hidden renewal fee
A buyer we supported in eMalahleni wanted a B2B franchise. She budgeted for the initial fee and monthly royalties, but only during our Numbers & Notes review did she see a five-year renewal fee equal to a third of the original buy-in. That fee was buried on page 27 of her disclosure document.
She nearly signed without spotting it. After confirming with the franchisor, she adjusted her five-year cash flow plan and avoided a nasty surprise when the agreement renewal came up.
Fee checks every buyer should do
You can pick up many hidden costs by working through a checklist before you sign. Use your disclosure document and agreement side by side, and get a capital review if you need help matching fees to your own numbers.
- Check if royalties are fixed, variable, or minimum guaranteed
- Find every marketing, technology, or support fee, even if 'optional'
- Ask if there are extra fees for territory rights, brand refreshes, or resale
- List all up-front and recurring licence, compliance and insurance costs
- Include salary costs at the national minimum wage of R30.23 per ordinary hour, as required by law
- Confirm if you must buy certain equipment or stock through the franchisor
How and when to reach us
If disclosure documents or agreements feel confusing, or you want a second opinion before signing, our Fit Finder and Numbers & Notes services can highlight cost surprises. Ms Zama Gxowa and our field guide team have seen every fee mistake in the book.
When reaching out via our contact form, please mention your type of business, which fee categories you need reviewed, and where you plan to operate. We can help you compare fee types and avoid the traps that catch many first-time buyers.
Ask us your fee questions
To get practical support with reviewing franchise fees or identifying less obvious costs, share your situation and top questions with our team. We will guide you step by step.