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A better approach to royalties

22 August 2013

When deciding whether or not to start your own business with a proven franchise model, there are many different factors to consider. But, in terms of financial outlook, one of the most important is the Management Service Fee (MSF) being charged by the franchisor.

Essentially, Management Service Fees are royalties paid from the franchisee to the franchisor every month. These can either be paid as a fixed-fee every month, offering no incentive to the franchisor to help their business owners boost business, or by linking the MSF to turnover. This helps to encourage a more symbiotic relationship and is a requirement for any franchise looking to secure bfa (British Franchise Association) accreditation to demonstrate best practice.

As a bfa accredited franchise, Betterclean Services employs the latter method. However where as many franchises charge MSFs of 10-15% or higher, Betterclean charges just 5.75%.

Dan van Kuyk, creator of the Betterclean Services business model, explains why:

“As a former franchisee myself, I know the areas that can make a big difference to our franchise owners in terms of growing their business and establishing a strong, trusting relationship with the franchisor. We aim to provide the most throughout support of any franchisor in the UK. The MSF is set at this level because I believe it is fair.”  

On top of the low MSF rate, Betterclean Services also doesn’t charge a marketing or IT levy to its franchise owners. Another practice that is common with many franchisors and increases the monthly contribution further.

Dan explains: “As part of our commitment to offer business owners the best deal we can, we’re not looking for areas where we can make a quick few extra pounds. It’s in keeping with our business approach that we look to offer a great service in a transparent and affordable way."

Dan’s ethos also rings true in how stock and equipment is sold to local business owners at cost, instead of marking it up which is again quite common in franchising.   

“We’re interested in building the Betterclean brand,” Dan concludes. “And for that we need franchise owners we trust and, as importantly, trust us. It works both ways."

Interested in finding out more? Contact franchise