Franchises With No Royalty Fees (2026): What Replaces the Royalty

Franchises with no royalty fees can still require substantial ongoing payments. The Human Bean, Ace Hardware and Matco Tools have no royalty fee or no royalty row in the 2026 FDD provisions below. Kona Ice belongs in a no percentage royalty comparison because it charges a fixed annual royalty. Mosquito Squad belongs separately: its standard royalty begins in month 13, subject to the FDD’s exceptions.

The FDDs are the primary sources for this comparison, checked October 14, 2026. Official website statements captured on that date are secondary context, not substitutes for the fee schedules. Compare required purchases and every applicable fee before treating a no-royalty label as a cost advantage.

PizzaForno’s licensing page also describes zero royalty fees; see the PizzaForno license-versus-franchise guide for its fee statements and the related agreement question.

What does “no royalty” actually mean?

A royalty can be a percentage of sales or a fixed amount. The absence of a percentage royalty says nothing by itself about brand funds, technology charges, required purchases or cooperative assessments. Required inventory is a separate cash obligation, not automatically a royalty under another name.

For a percentage-royalty comparison, see how franchise royalty fees work. The FDD Item 6 walkthrough explains how to read amounts, due dates and conditions together.

Which franchises charge no percentage royalty?

The replacement column covers brand funds, fixed payments, product purchases and cooperative membership. These are selected ongoing charges, not an exhaustive reproduction of each Item 6. Conditional fees and required purchases belong in the same budget, but should not be confused with an initial franchise fee.

Brand	Royalty (per FDD)	What replaces it	Other Item 6 fees	Source + date
The Human Bean	No royalty fee	Required coffee and supplies; Brand Fee of 1% of Adjusted Gross Sales Revenues, which may rise to 2%	POS $325/month; loyalty $80/month; gift card program $25/month; digital menu $15/month	2026 FDD, Items 6 and 8, issued February 25, amended May 5, 2026
Kona Ice	Fixed annual royalty: $3,000 in years 1–2; $4,000 in years 3–6; $5,000 in years 7–10	Fixed royalty plus Brand Fund: currently $1,000/year per KEV or KEV 2.0 truck, plus $200/year per additional piece of equipment; contribution can increase	Technology $600/year; KonaOS $35/month per KEV and $20/month per ancillary unit; required email $216/year/address or $18/month; conditional smoothie and additional-equipment royalties	2026 FDD, Item 6, issued April 20, 2026
Ace Hardware	No royalty row in Item 6	Cooperative membership; Item 5 affiliation fee and capital stock subscription; ongoing service charges and brand assessments	Core Retail Services $323.25/month per parent store, $134.75 per branch, increasing 2.5% annually; low-volume charge, freight, fuel surcharge and late-payment charges	2026 marked FDD, Items 5–6, issued March 25, 2026; document 35578-202603-05
Matco Tools	No monthly or periodic royalty, with Note (1)’s software maintenance exception quoted below	Required regular product purchases; minimum 60% year-to-date purchases-to-sales ratio	Computer maintenance/support table: $670 or $1,070 annually; Note (3): $475 current annual charge and $195 initial web setup included in table amounts; Note (4): possible $400 surcharge; credit-card processing software $350/year; webpage maintenance $195/year	2026 FDD, Item 6, issued April 6, amended August 1, 2026; document 37093-202608-02

Compare total ongoing cost, not just the royalty line

Our free comparison spreadsheet adds every Item 6 fee (royalty, brand fund, fixed fees, technology) into one ongoing-cost figure per brand. Plus the due-diligence kit.

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The Human Bean: supplies and a Brand Fee

The FDD states that The Human Bean does not charge a royalty and derives revenue from selling coffee and other supplies to franchisees. Item 8 requires specified approved-supplier purchases. Item 6 calls the contribution a Brand Fee: 1% of Adjusted Gross Sales Revenues, potentially increasing to 2%. Use that defined FDD base rather than assuming every reference to sales means the same thing.

The official FAQ, captured October 14, 2026, says: “We do not collect a royalty fee on sales.” It also says: “All locations contribute 1% of their gross sales revenue to a Brand Fund dedicated to promoting The Human Bean brand and supporting its drive-thrus.”

See the Human Bean cost breakdown for startup costs. The Human Bean versus Dutch Bros comparison explains how the two ownership paths differ.

Kona Ice: fixed royalties are still royalties

Kona’s Item 6 labels its annual payment a royalty. The schedule depends on tenure, not a percentage of sales. The Brand Fund can increase annually by up to 10%, or by any amount approved by a 75% super-majority of the Ad Council. Offering smoothies adds a $1,000 annual Smoothie Royalty; additional-equipment royalties currently range from $1,000 to $2,500 annually, depending on equipment. These conditional charges sit alongside the technology and software fees in the table.

For the Kona row’s startup-budget context, see food franchises under $25,000, which distinguishes a franchise fee from the full investment. Use the franchise royalty calculator to compare a fixed $5,000 royalty with a percentage royalty at your own sales.

Ace Hardware: cooperative membership has costs

Ace’s Minnesota-filed FDD is a marked copy issued March 25, 2026. Item 5 charges a $5,000 affiliation fee for each new location. It waives that fee for an existing hardware store converting from another wholesaler, a purchased store converting from another wholesaler, or a family ownership change at an existing Ace store. A qualifying veteran or active-duty serviceperson opening a new Ace store can also receive the waiver through the Veterans’ Incentive Program. For an entity, the qualifying individual must own at least 50%; the program may be changed or discontinued.

Item 5 separately requires a $5,000 par value capital stock subscription. It names the Ace Hardware Membership Agreement (Nonbranded), Ace Brand Agreement and Subscription for Capital Stock Agreement. A waived affiliation fee does not erase the separate stock subscription.

Item 6 contains no royalty row, but it lists these charges:

• Low-volume service charge: $100 per biweekly billing period if annual purchases are below $200,000. Effective January 1, 2027, the charge becomes $200 below $300,000 in annual purchases. New stores must be active for a full calendar year before this charge applies.
• Core Retail Services: $323.25 per month per parent store and $134.75 per branch, increasing 2.5% each year. These are the inserted amounts in the marked Item 6, not the superseded amounts.
• Freight: a fixed percentage of warehouse purchases, adjusted annually.
• Fuel surcharge: 0.25% applied to the net freight charge, adjusted weekly by 0.25% for every five-cent change in the national average diesel price.
• Late payment: 0.77% of the past-due biweekly statement balance, with rates of 0.384% in Texas and 0.692% in Georgia.

Item 6 also lists Annual Brand Assessment, Local Lift Max Assessment, restocking, insurance, point-of-sale and other service charges. The fees above are not the entire cooperative operating budget.

The official Ace site, captured October 14, 2026, says “No ongoing Franchise Fees No Royalty Fees” and “Ace Hardware is owned by its retailers. Instead of paying royalty fees, you become an owner of Ace Hardware and operate your own store.” Its FAQ, captured the same day, says “Ace has an initial franchise/application fee of $5,000” and describes a “minimum investment of $350,000 to $2 million+”. Those website statements do not replace the FDD’s separate affiliation, stock and ongoing-charge provisions; the website investment range is not presented here as an Item 7 total.

Matco Tools: regular purchases and software charges

Matco’s FDD, issued April 6, 2026 and amended August 1, 2026, states in Item 6, Note (1):

You are not required to pay any monthly or periodic royalty, franchise, license, advertising or other fee (except the annual software maintenance fee described below) during the term of the Distributorship Agreement.

Note (2) requires regular purchases of Matco products to maintain inventory and meet customer needs. It also requires a minimum 60% ratio of year-to-date purchases to year-to-date sales. This is an ongoing purchase obligation, not just a startup inventory bill.

Read the software row with its notes. The Item 6 table prints $670 or $1,070 annually for Computer Maintenance and Support. Note (3) states a $475 current annual charge, subject to increases of no more than $150 per year, and says the $195 initial webpage setup fee is included in the table amounts. Note (4) permits an additional $400 annual charge for a system that does not meet the specified requirements. Item 6 separately lists $195 annual webpage maintenance and $350 annual credit-card processing software. The printed table and notes should not be collapsed into a single unqualified software figure.

Item 5 sets the initial franchise fee at $10,000, or $7,000 for a new 225 Distributor. Item 7 lists a $104,374 to $376,241 total investment and $55,500 to $92,000 initial inventory.

The official cost page, captured October 14, 2026, says “$0 royalty fees & no advertising or franchise fees”. Its “Initial Franchise Fee” is “$10,000” and its “Total Investment” is “$104,374 – $376,241”, matching the FDD’s standard fee and Item 7 total. Its “Initial Inventory” range is “$55,000 – $92,000”; the FDD’s low end is $500 higher. The website slogan does not eliminate the initial fee or Item 6 obligations.

Is a “royalty-free first year” the same as no royalty?

No. Mosquito Squad’s April 29, 2026 FDD puts it in a separate category. Its Item 6 royalty row starts in the thirteenth month following the Original Opening Date and requires the greater of the tiered percentage calculation or the applicable minimum royalty.

Brand	Royalty-free first year and subsequent royalty	Source + date
Mosquito Squad	Standard schedule: no royalty for the first 12 months; from month 13, 10% on the first $250,000 of calendar-year Gross Revenue, 9% on the portion above $250,000 through $500,000, and 8% on the portion above $500,000, subject to minimum royalties below	2026 FDD, Item 6, issued April 29, 2026; document 36338-202604-10

The Item 6 minimum royalty schedule is monthly, measured in successive 12-month periods after the Original Opening Date:

Period after Original Opening Date	Standard territory minimum per month	Micro territory minimum per month
First 12 months	None	None
Second 12 months	$650	$400
Third 12 months	$950	$600
Fourth 12 months	$1,500	$950
Fifth 12 months	$1,800	$1,100
Sixth 12 months	$2,100	$1,250
Seventh 12 months	$2,400	$1,400
Eighth 12 months	$2,700	$1,700
Ninth 12 months through expiration	$3,000	$2,000

The Original Opening Date includes the first opening by a prior owner or predecessor, so buying an existing business does not restart the clock. Existing franchisees adding territory pay royalties immediately, with first-year minimums of $400 per month for a standard territory or $300 for a micro territory; the regular schedule applies from month 13. Item 6 also contains separate Legacy Program provisions, so the table above describes the standard offer rather than every existing agreement.

The official investment page, captured October 14, 2026, says: “Royalty Fee 8% to 10%: Royalties are not required for the first 12 months.” The FDD supplies the revenue bands, minimums and opening-date exceptions missing from that short claim.

Questions to ask before relying on “no royalty”

• Is the royalty absent, fixed in dollars or temporarily waived?
• What brand-fund, software, cooperative and other Item 6 fees apply, and how can they increase?
• What product purchases are required, and what purchase minimums or ratios apply?
• Does a resale retain the original opening date or royalty schedule?
• What will the full fee and purchase schedule cost at your own planned sales level?

Have a franchise attorney and accountant review the applicable FDD and agreements with you before signing. A royalty label is only one part of the cost comparison.