Franchise Royalty and Ad Fund Fees: Real 2026 Rates Compared

Every franchise fee conversation starts with the initial investment number because it’s the biggest figure on the page. The number that actually determines whether the location makes money for the next five or ten years is smaller and recurring: the royalty rate, the ad fund contribution, and whatever technology or platform fees ride along with them. Get the initial number wrong and you overpay once. Get the ongoing rate wrong and you’re overpaying every week the doors are open.

These fees are disclosed in Item 6 of the Franchise Disclosure Document, and they’re some of the least dramatic-looking numbers in the whole document. A line that says “6% of Gross Sales” doesn’t look like much until you run it against a real month of revenue and see what’s left over for rent, labor, and food cost. That’s the math this article walks through, brand by brand, using rates pulled from actual FDDs and franchisors’ own sites, not averages pulled from thin air.

We sell no franchise and take no referral fee from any brand named here. The job is to show you how the rate structures work so you can read your own Item 6 and Item 7 with the right questions ready, not to steer you toward or away from any specific system. Every figure below comes from an FDD or a named source disclosed in the sources list, not an estimate; see our editorial methodology for how we source and verify these numbers.

The three fee types stacked in Item 6

Item 6 of the FDD lists every fee a franchisor can charge beyond the upfront franchise fee disclosed in Item 5, and in food and beverage concepts three categories do almost all the work.

Royalty. This is the core fee you pay for the right to keep operating under the brand, keep using the trademark, and keep receiving whatever ongoing support the franchise agreement promises. In the systems compared here it is calculated on gross sales, except Scooter’s and Robeks, which use net sales. As of October 13, 2026, Scooter’s Coffee charges 6% of net sales, per its own franchising site and Item 6 of its FDD issued April 3, 2026. Dunkin’ charges 5.9% of gross sales, per its franchising site and Item 6 of its FDD issued March 26, 2026. Subway charges 8% of gross sales, per Item 6 of the FDD its franchisor, Doctor’s Associates LLC, issued April 30, 2026 (a copy hosted by Restaurant Finance Monitor). Toastique charges 6% of gross sales, per Item 6 of its FDD issued January 9, 2026 (a copy hosted by Restaurant Finance Monitor); its own investment page states no royalty rate. None of these numbers move based on whether the location was profitable that month.

Ad fund, marketing fund, or brand fund. This is a separate percentage, paid on top of the royalty, that the franchisor pools across the system to pay for national or regional advertising. Dunkin’s ad fund runs 5% of gross sales on top of its 5.9% royalty for a standard new restaurant, before any incentive program, per Item 6 of its FDD. Subway’s advertising contribution is 4.5% of gross sales on top of its 8% royalty, per Item 6 of its FDD. Caribou Coffee structures this as a marketing contribution of up to 3% of gross sales, currently split 2% to a brand fund and 1% for the franchisee to spend on local marketing, per Item 6 of its FDD issued April 28, 2026 (a copy hosted by Restaurant Finance Monitor). Toastique’s FDD lists a brand development fund of up to 2% of gross sales but states that collection is currently paused, so the rate charged today is the 6% royalty alone; it separately requires 2% of gross sales in local marketing spend that the franchisee directs but must still spend.

Technology and platform fees. This is a newer category, and it rarely gets the attention royalty rates get because the dollar amounts look small next to a percentage. An International Franchise Association article posted July 18, 2019 reported on a FranConnect review of 2,191 FDDs over a three-year period. It found that 61.9% of all franchisors collected a technology fee: 60.4% of franchisors charged a flat monthly amount and another 1.5% charged a percentage of revenue. The quick-service restaurant median tech fee in that study was $168 a month. That study is now seven years old, so treat it as a benchmark, not today’s average. Toastique’s FDD issued January 9, 2026 lists a technology fee of currently $500 a month (it may rise to $750) and, separately, a point-of-sale system fee of currently $80 a month. The $500 technology fee alone is above that 2019 median, and the two together ($580 a month) are well above it; the $80 POS fee on its own is below it.

Percentage of gross, flat fee, and sliding scale: three different structures

Most food franchises use a straight percentage of sales for the royalty, which is what every brand named above does (gross sales for most, net sales for Scooter’s and Robeks). Two other structures show up often enough that you should know how they behave differently.

Sliding scale royalties change the percentage as sales volume changes, usually dropping the rate as a location does more business. According to Lopes Law LLC’s March 11, 2026 breakdown of SERVPRO’s FDD Item 6 (a law-firm blog, not the FDD itself), SERVPRO uses a graduated royalty of 3% to 10% of gross sales that varies with the franchisee’s gross revenue, on top of a separate 3% national advertising fund contribution. Confirm the schedule in SERVPRO’s current FDD. Per that breakdown, new or lower-revenue franchisees pay toward the higher end and the rate falls as gross sales rise. The appeal for you depends entirely on which tier you expect to sit in during your first two or three years, not your fifth.

Flat dollar royalties charge a fixed amount per week or month regardless of what the location sold. Anytime Fitness runs on this model: its franchise site lists a flat royalty of $842 a month per center for owners of one to nine gyms ($647 a month at ten or more) and points to Item 7 of its 2026 FDD. As of September 29, 2026, the FAQ page on that same site still cites a $699 monthly payment, so confirm the current figure in Item 6 rather than on any web page. The tradeoff cuts both ways. A flat fee doesn’t grow if your location becomes one of the system’s best performers, which favors high-volume operators. It also doesn’t shrink in your slowest month or your first quarter while you’re still building a customer base, which is exactly when a percentage-of-gross royalty would have cost you less.

Neither structure is inherently better. What matters is running your own expected sales, from Item 19 if the franchisor discloses one and from independent sources if it doesn’t, against whichever structure the brand you’re considering actually uses. For more on reading that disclosure correctly, see our guide on how to read a coffee franchise’s Item 19.

Why a percentage of sales lands on whatever margin is left

A royalty calculated on gross sales takes the same bite whether your food cost ran 28% or 38% that month, whether a walk-in fridge died and cost you four days of inventory, or whether a slow Tuesday barely covered payroll. That’s true in every industry that charges a percentage-of-sales royalty. Food and beverage operators also carry food cost, labor and rent, so the fee lands on whatever margin those costs leave.

When a 6% royalty and a 2% ad fund come off the top of sales before any of those other costs are even counted, that combined 8% has already claimed a share of what would otherwise flow toward the bottom line. How big a share depends on your own margin, which no franchise page or article here can tell you. The International Franchise Association article cited above described quick-service royalties in its 2019 FDD sample as tending to sit on the lower side, at a 5 percent median rate, so the headline percentage is not what separates one franchise from another. What matters is how the percentage compares with the margin you can realistically expect. If you’re weighing a food concept against a non-food one, or a franchise against running an independent shop with no royalty at all, run the numbers on your own projected margin rather than comparing headline percentages across categories. Our coffee franchise versus independent comparison walks through that independent-operator side of the math in more depth.

A worked example: what the combined rate actually costs on a month of sales

The 14 brands below illustrate disclosed rates using hypothetical sales of $50,000 a month, or $600,000 a year ($50,000 × 12). These dollar figures are arithmetic, not projections or claims about actual location sales. They apply each percentage to the same amount and ignore differences between Gross Receipts, gross-sales and net-sales definitions. Most FDDs below were issued in 2026; Qdoba’s was issued December 9, 2025. Fixed technology and other fees are excluded, and local marketing is included only where stated.

Brand	Royalty rate	Ad fund rate	Combined rate	Dollars off a $50,000 month	Dollars off $600,000 a year (hypothetical)	Source
Culver’s	4% of Gross Sales	2.5% of Gross Sales	6.5% before local advertising	$3,250	$39,000	Item 6, FDD issued March 30, 2026
Scooter’s Coffee	6.0% of net sales	2.0% of net sales (cap 4%)	8.0%	$4,000	$48,000	Item 6, FDD issued 2026-04-03
Toastique	6.0% of gross sales	Up to 2.0%, currently not assessed	6.0%*	$3,000*	$36,000*	Item 6, FDD issued 2026-01-09
Caribou Coffee (Cabin/Chalet)	5.0% of gross sales	3.0% total: currently 2% brand fund + 1% local marketing	8.0%	$4,000	$48,000	Item 6, FDD issued 2026-04-28
Dunkin’	5.9% of gross sales	5.0% of gross sales	10.9%	$5,450	$65,400	Item 6, FDD issued 2026-03-26
Subway	8.0% of gross sales	4.5% of gross sales	12.5%	$6,250	$75,000	Item 6, FDD issued 2026-04-30
Wingstop	6% of Gross Sales	Currently 5.5% of Gross Sales (range 5% to 5.5%)	11.5%	$5,750	$69,000	Item 6, FDD issued 2026-04-21
Smoothie King	Greater of 6% of monthly Gross Sales or $500 a month	3% national (may rise to 5%), plus up to 2% regional or 2% local	About 11% today; 13% at the cap	$5,500	$66,000	Item 6, FDD issued 2026-04-08
Qdoba	5% of gross sales (6% at non-traditional sites)	4.5% marketing fee	9.5%	$4,750	$57,000	Item 6, FDD issued 2025-12-09
Robeks	7% of Net Sales on a first store (6.5% two, 6% three, 5.5% five or more)	2.5% of Net Sales	9.5% on a first store	$4,750	$57,000	Item 6, FDD issued 2026-04-17
Playa Bowls	6% of gross sales	2% national (cap 4%), plus at least 1% local marketing	9% with 1% local; 11% at the fund cap	$4,500	$54,000	Item 6, FDD issued 2026-04-30
Pokeworks	6% of Gross Sales	1.5% of Gross Sales	7.5%	$3,750	$45,000	Item 6, FDD issued 2026-04-10
Firehouse Subs	6% of Gross Sales	Currently 5% of Gross Sales (cap 5%)	11%	$5,500	$66,000	Item 6, FDD issued 2026-03-25
Freddy’s	5% of Gross Receipts	3% of Gross Receipts as of October 8, 2026 (2.5% at issuance)	8%	$4,000	$48,000	Item 6, FDD issued 2026-04-30

Culver’s franchise cost breakdown pairs its 4% gross-sales royalty with the initial investment and real-estate assumptions in its March 30, 2026 FDD. Its row excludes the minimum 1% of Gross Sales in local advertising required by Item 11 and any cooperative advertising contribution, which Item 6 caps at 4% as approved by a majority of the co-op’s members.

Scooter’s and Robeks charge on net sales (as each FDD defines it); Freddy’s uses Gross Receipts, and the others charge on gross sales. Freddy’s Gross Receipts excludes collected sales taxes and other taxes remitted to taxing authorities and loyalty points earned or redeemed; gift cards count at redemption rather than sale. On equal top-line sales, a net-sales basis lowers the dollar cost. Compare the actual exclusions in each definition using the gross versus net sales section of our Item 6 guide.

Del Taco’s franchise cost breakdown gives another net-sales example: its 5% royalty applies to net sales, per its April 13, 2026 FDD.

Freddy’s row uses the 3% fund rate scheduled in its April 30, 2026 FDD to take effect October 8, 2026. At issuance, its 5% royalty plus 2.5% fund totaled 7.5%; as of October 13, 2026, the disclosed schedule totals 8%, or 8% × $600,000 = $48,000 a year. The row excludes local advertising of up to 2% of Gross Receipts and cooperative advertising of up to 2%, which counts toward the local requirement. Item 6 allows the fund to exceed 3% with the specified restaurant vote and states that non-traditional restaurants pay a reduced fund contribution.

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Want to run these numbers against your own sales estimate instead of a round $50,000 month? Our franchise royalty calculator takes the royalty and ad-fund rates from Item 6 and shows the dollar cost per year and across a ten-year agreement.

*Toastique’s table figure excludes its separate required 2% local marketing spend. Including that spend brings the total to 8% today, or a hypothetical $48,000 a year. Its currently unassessed brand development fund can reach 2%, bringing royalty plus fund to 8% ($48,000 a year), or 10% ($60,000 a year) with local marketing included.

At Scooter’s 4% fund cap, royalty plus fund would total 10%, or a hypothetical $60,000 a year. Caribou’s row includes the current 2% brand fund and 1% local marketing allocation; its Kiosk royalty is 6%, rather than the 5% Cabin/Chalet rate shown. Dunkin’s row uses the standard rates before incentives.

Smoothie King’s example uses 6% + 3% + 2% = 11%; 6% of a $50,000 month is $3,000, above the $500 monthly minimum. At the 5% national marketing cap and with 2% regional or local marketing, the total is 13%, or a hypothetical $78,000 a year. Playa Bowls’ fund cap brings its total to 11%, or $66,000 a year, assuming 1% local marketing. Qdoba’s non-traditional royalty would make its combined rate 10.5%, or $63,000 a year. These are percentage calculations on the same hypothetical sales base, not forecasts.

Over a hypothetical ten-year agreement with unchanged sales and rates, Subway’s $75,000 annual figure totals 10 × $75,000 = $750,000; this is cumulative fee arithmetic, not compound interest.

The difference between the hypothetical Scooter’s and Subway figures is $2,250 a month, or $27,000 a year, before adjusting for their different sales bases. It does not establish what either franchisee keeps or earns. None of this counts technology fees, which the 2019 FranConnect data cited above put at a median of $168 a month for quick-service concepts.

This table is not a ranking of which brand is the better investment. A brand charging 12.5% combined might be delivering national brand recognition, proven site-selection support, and same-store sales volume that a lower-royalty brand can’t match, in which case the higher rate could still be the better economic deal at the unit level. The table exists to show you the mechanism: you cannot compare two franchise opportunities by royalty rate alone, and you cannot evaluate a royalty rate at all without knowing the ad fund rate riding next to it and the technology fee riding on top of both. For a full breakdown of how these ongoing rates interact with the upfront investment number, see our Item 7 walkthrough, and for how several coffee brands stack up side by side across investment, royalty, and footprint, see our coffee franchise comparison.

What to ask before you sign, not after

The royalty rate, ad fund rate, and any technology fee are all disclosed in Item 6, but Item 6 only tells you the rate. It doesn’t tell you what you get for it. Before you treat any combined rate as acceptable or too high, get direct answers, in writing where possible, on a short list of questions.

Ask what the ad fund actually paid for last year, not what it’s supposed to pay for. Some franchise agreements let the franchisor use ad fund dollars for costs that read more like general overhead than marketing that drives traffic to your specific location. Ask whether the technology fee is truly flat or whether the agreement reserves the right to convert it to a percentage of revenue later, the way some flat-fee royalty systems reserve the right to convert to a percentage-of-gross structure with notice. Ask current franchisees, not the franchisor’s development team, whether they feel the combined rate reflects real marketing lift and real system support, or whether it feels like a toll. Our guide to questions worth asking existing franchisees has a fuller list built around exactly this kind of validation.

None of these questions have a right answer that applies across brands. A 10% combined rate attached to a system with strong same-store sales growth and real marketing muscle behind it can outperform a 6% combined rate attached to a system that isn’t investing the fund in anything that reaches your customers. The rate alone tells you what you’ll pay. It doesn’t tell you what you’ll get, and that second half of the equation is the one Item 6 was never designed to answer. Pair the royalty review with an accountant’s review of the franchisor’s financial statements in Item 21.