The modern digital economy allows many parties to lend permission to use their property in exchange for a portion of all related revenue. A franchising business likely deals in royalty payments from equipment used, products sold, and more. Royalty management involves the handling of these royalties to ensure they are paid and received, while also ensuring that the current royalty deals and agreements are the best for the business and that they are being used well.
Understanding Royalty Management
Royalty management can be broken into the following tasks:
Continuous updating of royalty data. It should be easy for subordinates, such as franchisees, to upload their royalty information for their branch of the business.
Studying of royalty data for insights and issues. A franchisor should be able to view and study information in multiple ways, such as seeing which stores earn the most in royalties or which equipment is costing the most in royalty fees.
Processing royalty statements and delivering them to other corporate team members.
Making decisions and projections based on royalty data. This step is continuous as new data is received, analyzed, and delivered to help team members understand new goals and changes.
All of these tasks can best be accomplished through a streamlined royalty calculation software, but such software should also be attuned to the relevant type of business being operated. A calculation software for startups with only one store is not going to serve the needs of a rapidly expanding franchise.
Why It Matters
Because royalty payments proceed throughout the duration of contracts and are dependent on sales, they have a sense of fairness compared with large singular or installed payments. Industries dependent on royalties, such as music, continue to thrive in an age of greater and greater access to royalty deals through digital streaming and other methods.
Put simply, royalties have a large, growing influence on our modern business world. A chief procurement officer (CPO) or other leader within a company cannot afford to allow time-wasting mistakes through human calculation errors. In the same way, such a leader has limited time to devote to analyzing data. As a result, time-saving and reliable software is especially useful to these executives.
How Franchisors Use It
Franchisor responsibilities largely consist of communicating with franchisees and studying data to find innovation opportunities. However, for royalty management, such opportunities only present themselves when the franchisor has clear and easy-to-digest reports.
The days of inputting data manually into spreadsheets are numbered, and businesses that follow the new technological standards will be well-rewarded. As far as franchisees and stakeholders are concerned, CPOs and other leaders must serve as the confident face of their businesses. Managing royalties is one of the many tasks a CPO must execute in order to maintain that confidence, and he or she must be equipped to answer questions and justify decisions.
Are you considering making an upgrade to a modern, digital approach to grow your business efficiently? Synuma's project management software is the ideal choice for businesses with a limited tech budget, IT bandwidth, and time. The software includes everything a busy corporate executive needs to handle royalties for individual franchise units and the business at large.
Image via Flickr by Got Credit