💸 Zero Royalties Revealed — Too Good to be True?

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

Franchising is built on royaltiesAfter last week’s piece covering the basics of royalties, readers asked us about the highest highs and lowest lows when it comes to such fees. This week, we dig into the extremes. While some brands charge up to 60% of revenue, others charge 0%. What gives? Read more to find out.

This week, we also cover:
🍔 Freddy’s new private equity backer
🌮 Qdoba’s 50-unit development deal
🍗 Bojangles’ big leap into New Jersey

Let’s get into it!

💸 Franzy Insights: From 0-60%, A Speedrun through  Royalties Extremes

Last week, we broke down the basics of royalties. This week, we look at the extremes and what those numbers really mean for franchisees’ bottom lines.

The Highest Royalty Models

• H&R Block — up to 60% of revenue. Franchisees lean heavily on the brand’s marketing, technology, and infrastructure.

• Goosehead Insurance — up to 50% of commissions. A steep cut, but operators get a full back office and carrier management system.

• Chick-fil-A — 15% of sales + 50% of profits. One of the most unique models in franchising. Operators give up a huge share, but in return the company funds the real estate and buildout while delivering some of the highest per-unit volumes in the industry.

The Lowest Royalty Models

These brands advertise “no royalty fees,” but the franchisor still gets paid in different ways:

• 7-Eleven — earns through product markups and real estate.

• Residence Inn (Marriott) — charges reservation and system fees instead.

• Bimbo Foods Distribution, EXIT Realty, Sign Gypsies, Snowfox, SNOWFRUIT — all rely on supply contracts, technology fees, or wholesale margins.

Our Take:
Royalties tell you more than just what you’ll pay — they reveal how the franchisor makes money. A “0% royalty” sounds attractive, but it means you’re paying through the back door with higher supply costs, mandatory purchases, or rent. High royalty brands, meanwhile, can actually work in your favor if they’re taking on the heavy lifting of marketing, technology, or real estate. Chick-fil-A is the extreme example: their fees are sky-high, but their operators tap into a system that is so lucrative it’s harder to get a franchisee license than it is to get into Harvard (Washington Post).

The key isn’t chasing the lowest percentage — it’s understanding where the franchisor earns their share, and whether that aligns with your profitability. Smart operators dig into the full fee structure, not just the royalty line, to see where the incentives truly sit.

🍔 Freddy’s Finds a New Private Equity Backer

Summary:

• Rhône Capital has acquired Freddy’s Frozen Custard & Steakburgers from Thompson Street Capital Partners, which first bought the brand in 2021.

• Freddy’s has grown to 550 locations (94% franchised) with systemwide sales approaching $1B, fueled by nearly 200 new stores added under Thompson Street’s ownership.

• CEO Chris Dull and the leadership team will stay on, with Rhône expected to support continued expansion, including international growth and digital investments.

Our Take:
We’ve highlighted how private equity is taking an interest in franchisors (Franzy). Freddy’s is the latest case study in how different private equity firms can partner with a franchise brand across different growth phases. Thompson Street doubled down on development and digital; now Rhône brings the capital and global expertise to help Freddy’s step onto the international stage. For operators, it’s another signal that burger and custard still have plenty of investor appetite.

Link to Franchise Times →

🌯Qdoba Goes Big with 50-Unit Franchise Deal

Summary:

• Qdoba Mexican Eats signed one of its largest development agreements ever: 50 new restaurants with Barry Dubin’s B Wild Investments across Alaska, Utah, Nevada, Colorado, and New Mexico.

• The deal adds to Qdoba’s 600-unit development pipeline, with nearly 20 new franchisees joining in the past year and growth planned in Texas, Ohio, and the Northeast.

• Backed by Butterfly Equity, Qdoba aims to double its footprint by 2032, positioning itself as a leading fast-casual Mexican brand.

Our Take:
Qdoba is proving that the fast-casual Mexican category isn’t a one-brand show. With Chipotle’s dominance well known, Qdoba’s private equity backing and aggressive pipeline give it a real chance to capture more market share. Multi-unit veterans like Dubin bring serious operational muscle, signaling confidence that this category can support multiple winners.

Link to Chain Storeage →

☕ Bojangles Heads North with 35 New Jersey Stores

Summary:

• Charlotte-based Bojangles is bringing its Southern flavors to the Northeast, with franchise deals in place for more than 50 restaurants across the New York metro area, including 35 in New Jersey.

• ADS Restaurant Group, already operating 110+ Burger Kings, will lead the Jersey expansion after opening the brand’s first NJ store in Piscataway earlier this year.

• Additional deals include 20 New York City units, with the first Big Apple location set to open in East Flatbush this winter.

Our Take:
Bojangles has long been a Southern staple, but entering high-density markets like New Jersey and New York could be game-changing. Success here depends on strong franchise partners—and with veteran operators leading the charge, the brand has a real shot at becoming more than just a regional favorite.

Link to Jersey Digs →

☕ Dunkin’ Franchisee Shuts Plant, Cuts Jobs (Boston.com)

✂️ Sparkle Grooming Expands in Texas (Pet Age)

🍗 WingsUp Eyes U.S. Takeoff (Franchise Times)

🧒🏫 Why Now’s the Time for Children’s Lighthouse (1851 Franchise)