Studies on the Ongoing Royalty Payment in Franchise House

摘要

There are two forms of payment from franchisee to franchisor: the initial franchise fee and the ongoing royalty payment. The royalty payments are used to extract the value of the brand and support the ongoing franchisor. A bi-level programming model is used to study the payment in franchise system. The model indicates that the franchisees can be categorized into three areas: the more efficient franchisees, the normal efficient franchisees and the less efficient franchisees.