the franchising business model consists of two operating partners : the franchisor or parent company, and the franchisee, the proprietor that operates one or multiple store locations. Franchising agreements usually require the franchisee to pay an intitial free plus royalties equal to a certain percentage of the store's monthly or yearly sales. Intitial fee vary significantly across each industry, ranging from $35,000 for an Applebee's restaurant to over $85,000 to open a Hilton hotel. royalty fees are also variable - for example, intercontinental Hotels Group (IHG) franchisees are required to pay the company 5% of their yearly sales, while applebee's franchisees pay 4 % of monthly sales and IHOP franchisees pay a 4.5% royalty fee of weekly sales. the franchisee also covers the costs of actually starting and operating the store, including legal fees, occupancy or construction costs, inventory costs, and labor. Franchise agreements usually have a term of between 10 and 20 years, depending on the company.
the parent company authorizes the franchisee's use to company 's trademarks as part of the franchising agreement . Additionally, the franchisor provides training and support as well as regional and national advertising