Franchise Fee Cap Sample Clauses

A Franchise Fee Cap clause sets a maximum limit on the amount of franchise fees that a franchisee is required to pay to the franchisor. Typically, this cap applies to ongoing royalty or service fees, ensuring that even if the franchisee's revenue grows significantly, their fee obligations will not exceed a predetermined threshold. For example, the clause might specify that annual franchise fees cannot surpass a certain dollar amount regardless of sales volume. The core function of this clause is to provide financial predictability and protect franchisees from escalating costs, thereby making the franchise arrangement more attractive and manageable.