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White Belt
White Belt

Joined: 09 Jan 2020
Posts: 7

PostPosted: Mon Apr 26, 2021 10:07 am    Post subject: opening dojo under sensei's name - fee/percentage? Reply with quote

I recently moved back to my hometown near Los Angeles and am planning to opening a new dojo under the same name as my sensei's, but fully owned, incorporated, and operated by me - so basically a franchise.

He currently operates out of 1 full-time location. The new location is about 12 miles driving distance from the original so both he and some students who live between can visit from time to time, which will really help bootstrapping (an essential reason I'm starting up under his name and not my own).

What is a reasonable franchise fee + royalty percentage under such circumstances? He's not big on writing up contracts or logistics and such, so it's up to me to write up the franchise agreement and ensure I'm offering him numbers that are reasonable.

His baseline business health:
he has 5 stars on both Google and Yelp and is willing to amend his website to include my location so I can piggyback off his SEO
due to both the economy and personal losses, his business took a hit over the past year but was recovering nicely in 2018-2019 until COVID hit
I have been assisting unpaid at his dojo for the past 2.5 years, re-learning the ropes of teaching (it's been 20 years since I stopped training with him when I left for college), and have in particular put in a lot of hours getting him through COVID
I'm considering a one-time franchise fee of $10K, with a recurring royalty of 5% or maybe 10% of gross revenues. The latter depends on whether marketing budget is covered by royalty or separate - at the moment he only spends $300/month on Yelp, but I'm thinking about going for a Spanish-language radio and/or YouTube buy to maximize impact per cost.

These numbers are based on what I've read is typical for "normal" franchises, but I'm wondering whether there are customs specific to karate dojos?
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KF Sensei
KF Sensei

Joined: 31 Mar 2006
Posts: 29086
Location: Hays, KS
Styles: Taekwondo, Combat Hapkido, Aikido, GRACIE

PostPosted: Mon Apr 26, 2021 4:28 pm    Post subject: Reply with quote

Hello there, and welcome to KF!

I think between 5 and 10% is pretty reasonable. Do you plan on that being from the monthly dues, or will that include testing fees, as well (if you charge testing fees)?

Something else you might consider is if you ever decide to stop promoting your business under his name, or if he moves on and retires, what kind of arrangements can be made for you to either take control of the entire interest, if possible.
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