Royalty rates:

Suggested royalty rates for trademark registered goods / services

Royalty rate (as a % of turnover)	Goods / services	Example
2‐3%	High‐volume goods	ARO paper clips
4‐5%	Accomodation	Protea hotels
	Animal health products	Wormox
	Plant / agricultural	Kynoch fertilizer
	Restaurants	Fishmonger restaurant
5‐6%	Baked goods	Melissa's fine pastries
	Building, construction	Group 5 construction
	Fast food	Debonnairs Pizza
	Printing services	Postnet
	Travel	Thompsons travel
6‐7%	Automotive goods	Bosch service
	Child‐related	Yeesh! Fun for Kids
	Education‐related	Montessori school
	Maintenance services	Perfect gardens
	Perfume	Bulgari
	Retail food	Quickshop
	Retail	SuperSpar
	Service business	Don't Q
	Sports & recreation	Xtreme indoor Karting
7‐8%	Designer labels	Uzzi
	Real estate services	Vered
	Softcover books (includes copyright)	Jacques Pauw
10‐11%	Hardcover books (includes copyright)	Wilbur Smith
11‐12%	Business services	Octagon accountants
12‐13%	Capital equipment	Bundu electricity generators
	Personnel services	DAV recruitment

Royalty rule of thumb

A trademark licensee can expect to pay between 10% and 25% of the licensee's profits before interest and tax as a royalty for use of the trademark. But, to demand any royalty, the trademark must enjoy a reputation that drives custom / trade.

Franchising

• If your business model is a franchise, add another 1‐2% fee as a contribution towards marketing and advertising.
• Ensure your South African franchise agreement complies with the Consumer Protection Act.