Restaurant franchise royalty in India is usually 4 to 10% of the outlet's sales, often with a separate marketing fee of 2 to 5%. Example: an outlet with ₹8 lakh of net sales at 6% royalty and 2% marketing owes ₹64,000, plus 18% GST of ₹11,520: an invoice of ₹75,520.
Typical rates in India
| Fee | Usual range | Charged on |
|---|---|---|
| Royalty | 4 to 10% | Monthly sales of the outlet |
| Marketing or brand fund | 2 to 5% | Monthly sales of the outlet |
| GST on both fees | 18% | The fee amount |
Ranges seen across Indian restaurant franchises. The exact rate is whatever your franchise agreement says.
A worked example
| Line | Amount |
|---|---|
| Outlet net sales in September | ₹8,00,000 |
| Royalty at 6% | ₹48,000 |
| Marketing fee at 2% | ₹16,000 |
| Fees before GST | ₹64,000 |
| GST at 18% | ₹11,520 |
| Invoice to the franchisee | ₹75,520 |
The question that causes most disputes: which sales?
Royalty is a percentage, so the sales figure it is charged on matters as much as the rate. Write these down in the agreement:
- Gross or net: before or after discounts and complimentary dishes.
- GST: almost always excluded from the sales figure.
- Delivery orders: on the order value, or on what reaches the outlet after app commissions.
- Minimum royalty: whether a floor amount applies in slow months.
- Due date and late fee: for example, by the 10th of the next month.
A clean monthly routine
- Close each outlet's sales for the month, from the POS, not from a spreadsheet the outlet sends.
- Apply each outlet's own rate from its agreement.
- Raise the invoice with GST, and mark it invoiced.
- Record the payment with its reference, and chase what is overdue.
- Flag outlets whose sales days are missing before working out royalty.
Keep the agreements in the same place
Royalty disputes usually start from an agreement no one has read since it was signed. Keep every franchisee's rate, territory, agreement dates and documents next to the royalty, and get a reminder before an agreement or licence expires.
Royalty without the spreadsheets
Peasily Brand works out royalty and marketing fee from each outlet's real POS sales, applies each franchisee's own rate, tracks invoiced and paid amounts, and flags agreements before they expire.
Franchise management is part of Peasily Brand. Screens from the Peasily demo brand.
Questions
What is the usual franchise royalty for restaurants in India?
Usually 4 to 10% of the outlet's monthly sales, with a separate marketing or brand fund fee of 2 to 5%. GST at 18% is added to both.
Is royalty charged on gross or net sales?
It depends on the franchise agreement. Most brands use net sales: after discounts and before GST. Write the definition into the agreement to avoid disputes.
Does Peasily calculate franchise royalty?
Yes. Peasily Brand works out royalty and marketing fee from each outlet's real sales every month, applies each outlet's own rate, and tracks invoiced and paid amounts.
See your own numbers in Peasily
We'll walk you through it with your real menu and outlets.