ARTICLE

Pricing Your Franchise Package So Franchisees Actually Earn

November 11, 2026 · Franchising

"Magkano ba dapat ang franchise fee namin? 'Yung kakumpitensya, ganito ang singil."

Many first-time franchisors set their package price by looking at a competitor or by asking, "Magkano kaya ang kaya ng buyer?" It's an understandable start, but it often leads to one of two problems:

Too high: franchisees struggle to recover their investment and the network gets a reputation for weak branches.
Too low: the franchisor can't afford to support the network, and quality slips.

A good franchise package is priced so that the franchisee can earn first. When franchisees earn, they renew, they open more branches, and they recommend you. That's how a network grows.

Start with the unit economics of a real branch

Before you set any fee, get honest numbers from your own company-owned branch (ideally more than one):

Monthly sales, in a normal month and in a slow month
Cost of goods sold
Rent, salaries, utilities and other operating costs
Net profit before the owner's salary, and after it

If you don't have a company-owned branch with at least a year of stable numbers, that's your first step. We explain why in Company-Owned Pilot Branch: Why You Need One Before Franchising.

Work backward from the franchisee's investment

Add everything a franchisee will spend to open: franchise fee, build-out, equipment, initial inventory, permits, training costs, and working capital for the first months.

Then ask: with realistic sales, after paying all costs including your royalty and marketing fee, how long before the franchisee gets their money back? If the answer only works in the best-case month, your package is too heavy.

The three parts of a franchise package

1. Franchise fee. This pays for the right to use your brand and system, plus your initial support: site evaluation, training, opening assistance. Price it to cover your real costs of bringing a new franchisee in, with a fair margin.

2. Ongoing fees (royalty and marketing). These fund continuing support: field visits, product development, marketing, systems. Royalties can be a percentage of sales or a fixed monthly fee. Each has pros and cons, and the right choice depends on your business type and how easily sales can be monitored.

3. Supplies and package inclusions. If franchisees buy products or supplies from you, be transparent about pricing. Hidden markups damage trust faster than a high royalty.

Test your package before you sell it

Run three scenarios (good, average, slow) for a franchisee's first two years.
Ask a franchisee-minded person to read your numbers and challenge them.
Compare with your support costs. Can your ongoing fees actually pay for the support you promise?
Be ready to explain every peso. Serious prospects will ask.

Never promise income

Share realistic figures from actual branches only if you can back them up, and say clearly that results vary. Never present a "guaranteed" return. In October 2026, the SEC recently issued an advisory against a so-called franchise offering a guaranteed 4% monthly return to people who would not run a branch, and said offers like that are investment contracts that must be registered with the SEC (Philippine Daily Inquirer, October 28, 2026). Read why in our article Franchise or Investment Scheme? How Franchisors Stay on the Right Side.

One line to remember

"Price your franchise so the franchisee wins first. A network of earning franchisees is the best sales pitch you'll ever have."

Your turn: Franchisors, how did you arrive at your current franchise fee? What would you change if you priced it again today?

Planning or reviewing your franchise package? GMB Franchise Developers can help you build a package that works for both sides. Message us or visit gmb.ph for a Franchise Readiness Check.

About GMB Franchise Developers GMB Franchise Developers helps Filipino businesses build franchise systems, led by Armando "Butz" Bartolome, The Franguru, with 35 years in business and 350+ brands helped. Talk to us at gmb.ph.