# Franchise Royalty Calculator | Free Tool | Commmerce™ > Calculate monthly franchise royalty on a flat, tiered or fixed-fee model, with a minimum guarantee, marketing fund and GST, and see the effective rate at different sales levels. Canonical: https://commmerce.com/tools/franchise-royalty-calculator.html Free Tool # Franchise Royalty Calculator For franchisors setting terms and franchisees checking them. Enter monthly sales and the royalty model to see the royalty, marketing fund and GST, and how the effective rate changes when sales rise or fall. Monthly sales of the outlet (₹, excluding GST) Royalty model Royalty rate (%) First slab up to (₹)Rate on first slab (%) Second slab up to (₹)Rate on second slab (%)Rate above that (%) Fixed fee per month (₹) Minimum royalty per month (₹, 0 if none) Marketing fund (% of sales) GST on royalty and fund (%) #### Related tools [New Store Break-even & Payback](new-store-break-even-calculator.html)[Margin Calculator](margin-calculator.html)[GST Calculator](gst-calculator.html)[GST Invoice Generator](gst-invoice-generator.html)[Multi-store Fragmentation Estimator](multi-store-fragmentation-cost-estimator.html) **Disclaimer:** This free tool is provided by Commmerce for general informational and estimation purposes only. Results are indicative and depend entirely on the figures you enter. Commmerce makes no warranty as to accuracy or completeness and accepts no liability for any loss or decision made based on this tool. Always verify with a qualified professional (chartered accountant, tax advisor, or the relevant official source such as the GST portal or CBIC) before acting. ## How the royalty is calculated - **Flat**: royalty = sales x rate. - **Tiered (slab-wise)**: each slab of sales is charged at its own rate and the amounts are added up. - **Fixed fee**: the same amount every month, whatever the sales. - **Minimum royalty**: if the calculated royalty is lower, the minimum is charged instead. - **Marketing fund**: a separate percentage of sales. - **GST** is added on the royalty and the fund at the rate you enter. The **effective rate** is royalty divided by sales. The table under the result repeats the sum at 50% to 150% of your sales figure, which shows where the minimum guarantee bites and how slabs lower the rate as the outlet grows. ### Worked example (illustrative terms) An outlet sells ₹10 lakh a month. The agreement charges 7% on the first ₹5 lakh and 5% on sales from ₹5 lakh to ₹15 lakh, with a ₹40,000 minimum and a 2% marketing fund. Royalty is ₹35,000 + ₹25,000 = ₹60,000, an effective 6%. The marketing fund is ₹20,000. With 18% GST on both (₹14,400), the franchisee pays ₹94,400 for the month. In a weak month of ₹5 lakh sales the slab royalty would be ₹35,000, so the ₹40,000 minimum applies and the effective rate rises to 8%. ## What to check in a franchise agreement - Which sales the royalty is charged on: gross or net of returns, discounts, GST and online orders. - Whether slabs are applied slab-wise or to the whole amount once crossed. - How often the minimum guarantee would apply at realistic sales, especially in the first months. - When royalty is due, how sales are reported to the brand, and whether the brand can see the outlet's billing data directly. - Whether the rates rise after a set number of years or on renewal. Pair this with the [new store break-even calculator](new-store-break-even-calculator.html) by adding the royalty and fund percentages to its other variable costs, so the outlet's payback reflects what the franchisee actually keeps. ## Frequently asked questions How is franchise royalty usually calculated in India? Most agreements use one of three models: a flat percentage of the franchisee's monthly sales, a tiered percentage where the rate changes as sales cross set slabs, or a fixed monthly fee. Many add a minimum monthly royalty and a separate marketing or brand fund contribution. The franchise agreement decides which sales figure the percentage applies to, so read the definition of gross or net sales carefully. What is a minimum guarantee in a franchise royalty? It is the lowest royalty the franchisee pays in a month, whatever the sales. If the percentage works out below the minimum, the franchisee pays the minimum. It protects the brand when a store underperforms and shifts that risk onto the franchisee, so check how often it would apply at realistic sales. How do tiered royalty slabs work in this calculator? Slab-wise, like income tax: the first slab of sales is charged at the first rate, the sales inside the second slab at the second rate, and so on. Some agreements instead apply one rate to the whole amount once sales cross a slab. If yours does, use the flat model with the rate for your expected sales. Is GST charged on franchise royalty? Royalty and franchise fees are payment for a service, so the brand charges GST on them, commonly at 18%. A GST-registered franchisee can usually claim this as input tax credit. The rate and treatment depend on the service and your registration, so the calculator lets you change the rate; confirm it with your CA. Should the marketing fund be included in the royalty? Most agreements keep it separate: royalty pays for the brand and support, the marketing fund pays for campaigns that benefit all outlets. The calculator shows both and the total, because the franchisee's cash outflow is the total. ### Running a franchise network? Commmerce gives franchise networks central control with branch-level flexibility, on one inventory view across every outlet and warehouse. [See Commmerce for franchises](https://commmerce.com/franchise) [Book a demo](https://commmerce.com/schedule-demo/)