Why Can a Franchisee Usually Pay Less Rent Than a Corporate Operator?
A franchisee hands over a share of revenue before rent is ever discussed. Across four brands that publish the figures, it runs from 10% to 17.4% of sales.
That money is gone before the first rent conversation, and it is the reason two tenants with identical sales have very different capacity to pay.
What the brands charge
Crumbl: 8.0% royalty plus 2.0% marketing — 10.0%
Wingstop: 6.0% royalty plus 5.5% ad fund — 11.5%
Domino's: 5.5% royalty plus 4.0% national ad plus 2.0% local co-op — 11.5%
Mathnasium: royalties and marketing combined — 17.4%
Company-operated brands pay none of it. Chipotle, Shake Shack, Sweetgreen and Potbelly own their stores, so there is no royalty and no ad fund. Note that these are assumptions based on available public data from September 2026.
Stack it with rent and the gap is obvious
Add occupancy cost to franchise fees and you get what leaves the business off the top before a single employee is paid:
Chipotle: 5.2%
Shake Shack: 7.7%
Sweetgreen: 9.6%
Potbelly: 10.8%
Domino's franchisee: about 25%
Mathnasium franchisee: about 30%
The corporate operators cluster between 5% and 11%. The two franchised models sit at 25% and 30%. Nearly all of that difference is fees.
What it means at the table
Fees are closer to rent than to a startup cost. They renew every month for the life of the agreement, they scale with sales, and the franchisee cannot negotiate them with you or with anyone.
So a franchisee's lower rent ceiling is not reluctance and it is not a negotiating posture. It is arithmetic that was settled before they ever saw your space.
The question to ask
Ask what the royalty and ad fund actually are.
Most franchisees will tell you, and the answer materially changes what you should expect. A brand taking 17% off the top has meaningfully less room than one taking 10%, at identical sales. And a corporate operator paying nothing has more room than either — which is worth knowing before you assume the national name is the stronger tenant.
Understanding Retailers covers what a growth brand needs, what an independent needs, and how to tell which one is sitting across from you.