Franchise royalty fees are a standard part of franchising—you pay the franchisor for the privilege of being part of their brand, the use of their business model, and for the resources they provide or source. Franchise royalties vary widely across the industry, ranging from as little as a few percentage points of total sales to a large chunk of change. They can be high enough to slash profits for franchisees or a fair trade for the use of the franchisor’s brand. However, not all franchise systems run on this model. One such franchise is Driven Digital Ads. Instead of the franchisees paying royalties to the franchisor, the franchisor pays franchisees royalties in this digital signage franchise model.
If you’ve been to an airport or a higher end shopping mall lately, you might have noticed digital signage in the walkways. Driven Digital Ads franchisees place these digital signs in high-traffic areas like shopping malls and sell local ads every month. The franchisor sells national ads on top of the franchisee’s work for local ads and pays the franchisee a 15% royalty fee for putting these national ads on their signs.
The responsibility of the franchisee is to handle the maintenance and administration of the sign, pay for operational costs, and sell local ads. They work with local businesses to produce engaging ads starting at $249.95 per month with the option to up-sell for additional features, like animation or video advertisements. Because of the low cost and hyper-local nature of the ads, they’re an affordable option for businesses to build brand awareness and bring in customers.
The largest costs for startup are the franchise fee, which is set at a modest $25,000, and the cost of display units. Depending on the number of units purchased, franchisees can expect to spend between $42,250 and $84,250. After setting up with the Drive Digital Ads franchisor, the franchisees should expect these other immediate costs:
- the first month’s rent at their location
- three months working capital
- startup costs for a 4G network contract
- digital ad insurance for one year
These represent most of the ongoing costs as well — no inventory, few if any employees, no office space required. This can be a home-based business, and absentee owners are allowed.
Driven Digital Ads teaches franchises how to maintain and operate their digital signs, technical skills, and sales techniques to sell local ads.
Franchisees that sell 24 ads can expect to bring $5,998.00 per month in gross revenue every month they keep those ads active. There’s opportunity to earning more by upselling to advertisements with special features, gaining a 15% royalty for national ads from the franchisor, and adding additional signage locations.