Royalty Fee

A royalty fee is a payment made by one party to another for the ongoing right to use a specific asset, such as a brand, patent, or copyrighted material. Typically, the fee is a percentage of revenue or a fixed amount, and it is paid regularly, often monthly or annually. For example, a franchisee pays a royalty fee to the franchisor for using the brand and business model. This fee compensates the owner for granting access to their intellectual property and ongoing support, enabling the licensee to operate under the established brand or technology.