💸 ⚖️ Franchise Royalties — Cost or Competitive Edge?

Welcome to the Franzy Five — your 5-minute fix on what’s moving in the franchise world.

From marketing and tech to training and support, royalties keep the franchisors running. The value you get back as a franchisee can make or break your investment. This week, we unpack what royalties really buy you, and why understanding them is critical before signing any franchise agreement.

Also in this edition:
🍔 Steak ’n Shake’s survival strategy after 200 closures
🏋️ How multi-unit operators are powering Planet Fitness growth
☕ What an $18B Keurig deal means for Peet’s Coffee

Let’s get into it.

💸 Franzy Insights: What Franchise Royalties Really Buy You

Franchise royalties can feel like money out the door, usually 4–12% of gross sales but they’re also what keep the system running. 

Here’s the breakdown:

• The Basics: Royalties are ongoing fees that franchisors collect beyond the initial franchise fee.
  

• The Range Varies: Most fall between 4–9%, though some franchisors in specialized industries like H&R Block can charge as much as 60%.
  

• What They Fund: National marketing campaigns, training, technology systems, R&D, and on-the-ground support for franchisees.
  

• The Tradeoff: Higher royalties often come with stronger brand recognition and support, while low royalties may mean you’re more on your own

Our Take:
Royalties are often misunderstood. Done right, royalties don’t just pay for themselves; they multiply your leverage as an operator.

In practice, they’re what powers the engine of franchising. National ad campaigns, bulk purchasing power, training programs, and tech systems all come from that pool. That said, not every franchisor reinvests equally. Some systems over-collect without giving much back, leaving franchisees questioning the value. That’s why due diligence matters. The question isn’t only “How much will I pay?” but “What am I getting in return?” If you want to dig deeper into how royalties are structured, what different industries charge, and how they impact profitability, check out our full breakdown here: Understanding Franchise Royalties

🍔 Steak ’n Shake’s 4 Moves to Survive After 200 Closures

Summary:

• After shutting down 200 locations since 2017, Steak ’n Shake has ended table service and shifted to self-order kiosks and counter service.

• The brand has rolled out a $10K franchise fee, positioning itself as more accessible to operators.

• Other big changes: bringing back beef tallow for frying and even accepting Bitcoin payments.

• Early signs look positive — sales in the first half of 2025 rose nearly 15% year-over-year.

Our Take:
On paper, Steak ’n Shake’s pivots look bold, but not all of them help operators equally. Accepting Bitcoin could be more of a PR stunt than a business driver, and frying in beef tallow won’t change unit economics. Even the $10K franchise fee comes with fine print: the total investment still ranges from $316K to $1.34M, putting it on par with other big burger brands. The real question is whether these changes make Steak ’n Shake a stronger long-term bet, or just a louder one in the short term.

Link to The Sun →

🏋️ Planet Fitness Flexes Multi-Unit Muscle

Summary:

• Planet Fitness has added 600+ gyms in the last five years, reaching 2,762 locations and 20.8M members. Classic memberships start at $15, while nearly two-thirds of members opt for the $25 Black Card tier.

• Growth is driven by large franchise groups: National Fitness Partners now runs 200 gyms, Taymax 175, and Ohana 84 — often backed by private equity. New gyms can cost up to $5M to open.

• Top-performing clubs average $2.6M in annual membership revenue, with site sizes ranging from 13,000 to 30,000 square feet as landlords repurpose old retail boxes.

Our Take:
Budget gyms are booming, and Planet’s brand scale gives it unmatched marketing power and pricing strength. But this isn’t a play for mom-and-pop operators, it’s a big-money, multi-unit game where capital and real estate drive success. For smaller investors, the lesson is clear: fitness works, but it’s best tackled with strong partners or in concepts that scale down more easily.

Link to Franchise Times →

☕ Peet’s Coffee Gets New Life in $18B Keurig Deal

Summary:

• Keurig Dr Pepper is acquiring JDE Peet’s, parent of Peet’s Coffee, in an $18B transaction that will spin off a new “Global Coffee Co.”

• Peet’s footprint has declined from 217 stores in 2022 to 199 in 2025, with most still concentrated in California.

• Drive-thru units are the bright spot, averaging $1.7M in annual sales versus $1.1M for non-California cafés.

Our Take:
For years, Peet’s has been overshadowed by Starbucks and Dunkin’, with a shrinking footprint and middling unit volumes. This acquisition could give the brand fresh capital, sharper strategy, and a stronger global platform to compete. For operators, the big lesson is in the numbers: consumers are flocking to convenience. The drive-thru model isn’t just keeping Peet’s afloat — it’s the playbook for any coffee concept trying to grow today.

Link to 1851 Franchise →

📋 How to Nail Discovery Day: Lessons from Lori Osley (Franchising.com)

🥨 Auntie Anne’s Eyes Airports — and Cinnabon — for Growth (Restaurant Dive)

☕ Craveworthy Brings Gregorys Coffee Into National Expansion Play (NJBIZ)

🌯 Catering Boosts Franchisee Profitability at Hot Head Burrito (Franchise Times)