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Royalty Calculator
See how royalty owed changes across the three common models, and why margin-based royalties align incentives when COGS matters.
Your inputs
Your results
Gross margin (monthly)
$61,200
Ad fund (monthly / annual)
$1,700 / $20,400
| Model | Monthly royalty | Annual royalty | Effective rate |
|---|---|---|---|
| % of gross revenue | $5,100 | $61,200 | 6.0% |
| % of gross marginFairer modern model | $3,672 | $44,064 | 4.3% |
| Flat fee | $3,500 | $42,000 | 4.1% |
Margin-based royalties align franchisor and franchisee incentives when COGS fluctuates. That is why many modern wellness systems (including LynkPilot's billing model) calculate on gross margin instead of top-line revenue alone.
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How this is calculated
- Gross margin = monthly revenue × (1 − COGS%)
- Revenue royalty = monthly revenue × royalty rate
- Margin royalty = gross margin × royalty rate
- Flat fee = entered fixed monthly amount
- Ad fund = monthly revenue × ad fund rate
- Effective royalty rate = royalty owed ÷ monthly revenue
All outputs are planning estimates, not guarantees. Consult the brand FDD and your advisors for decisions.