Royalty rates, franchise fees, Item 7 ranges, and unit-level EBITDA vary substantially by sector. Education franchises support 8-12% royalties on 75%+ gross margins. Casual dining caps out at 6% because labor costs eat the rest. Each of these guides shows the real numbers, the real stall patterns, and the real path to franchising in your category.
QSR, casual dining, and coffee/dessert concepts. The most franchised category in the world — and the most studied. Royalty math is unforgiving.
Examples: McDonald's, Subway, Chick-fil-A
Examples: Applebee's, Outback Steakhouse, Buffalo Wild Wings
Examples: Dunkin', Tim Hortons, Scooter's Coffee
Cleaning, home services, automotive, B2B services, real estate, and pet services. Lower capital intensity than food service, often higher royalties supported by stronger gross margins.
Examples: Great Clips, Supercuts, Sport Clips
Examples: Merry Maids, Molly Maid, ServiceMaster Clean
Examples: Mr. Rooter, Roto-Rooter, Mosquito Joe
Examples: The Growth Coach, Padgett Business Services, Liberty Tax Service
Examples: Jiffy Lube, AAMCO, Midas
Examples: Camp Bow Wow, Dogtopia, Aussie Pet Mobile
Fitness, senior care, and wellness (massage, chiropractic, med-spa). Membership-model recurring revenue supports premium royalty rates.
Examples: Anytime Fitness, Orangetheory Fitness, F45 Training
Examples: Home Instead, Comfort Keepers, Right at Home
Examples: Massage Envy, The Joint Chiropractic, iCRYO
Tutoring, learning centers, and childcare. Among the highest royalty rates in the franchise universe — supported by 75%+ gross margins on instructional time.
Brokerage franchising operates on commission-split economics — franchisees collect agent commissions and pay royalties on a percentage.
Hotels and lodging. A completely different scale of capital and operator profile from most franchise categories — typically the domain of real estate developers and hospitality investors.
Sector benchmarks give you the typical range. Setting your specific rate requires unit-economics math against your actual numbers — and cross-checking against franchisee return on invested capital. The full framework is in our pillar guide.
Read: Industry Benchmarks by SectorEducation and tutoring franchises typically carry the highest royalty rates in the franchise universe — often 8-12% of gross franchisee revenue. Their high gross margins (often 75%+ on instructional time) and recurring tuition revenue support these premium rates while still leaving the franchisee with strong returns. Health & wellness and B2B services follow at 6-10%, also supported by recurring-revenue dynamics.
Food service categories — quick-service restaurants, casual dining, and hotels — cluster at the lowest end of the royalty range, typically 4-6%. Thin unit-level margins (often 10-22% EBITDA) constrain how much franchisors can extract while still leaving franchisees with viable economics. Higher royalties in these categories tend to drive operator candidates to competitors at lower rates.
Home services (HVAC, plumbing, lawn care, restoration) and education franchises typically deliver the highest unit-level EBITDA — often 22-35% at maturity. Strong gross margins, lower technology overhead, and (for home services) trade certifications that protect against generic competition all contribute. Net franchisee profit after royalty depends substantially on operator quality and local market dynamics.
Cleaning and janitorial franchises typically have the lowest Item 7 ranges — often $30K-$150K total initial investment — because most operate from home with a vehicle and equipment rather than a brick-and-mortar location. B2B services franchises ($50K-$200K) and home services franchises ($75K-$350K) are also relatively low-capital entry points compared to food service ($250K-$3.5M+) or hotels ($5M-$30M+).
The right industry depends on three things: your existing business (don't pivot to a category you have no operating experience in), your unit economics (if your existing business is in a category, validate that the unit margins support the franchise revenue split), and your operator profile match (different categories attract different operator candidate pools — make sure your sales motion aligns).
Fifty-one state guides covering FDD registration tier, regulating agency, filing fees, review timelines, and the regional dynamics that determine which franchise concepts thrive in each state.
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