Are Franchise Income Guarantees A Good Idea?

‎SmartCompany.com.au:

Income guarantees have existed in mobile service franchising for more than a decade, but in recent times they have started to appear among retail franchises as well.

There are both advantages and disadvantages to the provision of income guarantees, with different approaches taken by service and retail franchises with varying degrees of success.

At their simplest, income guarantees are top-up payments made by the franchisor to a franchisee to a predetermined level, depending on the performance of a franchisee’s business.

For example, an income guarantee of $1,000 per week in a service franchise may not mean that the franchisor actually pays $1,000 to the franchisee if they generated sales of $800, but would instead pay $200 as a top-up amount so that the franchisee’s overall sales income for the week is $1,000. Read more.

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