Final answer:
A royalty fee is a set percentage of a franchisee's revenues paid to the franchisor for the rights to use the franchisor's brand and includes ongoing support.
Step-by-step explanation:
A royalty fee refers to the percentage of franchisees' revenues paid to an organization, which has granted the right to use its brand name, products, and processes. When a person or entity becomes a franchisee, they have purchased the rights to start a business based on a model designed by the franchisor. This business arrangement involves an initial franchise fee and ongoing royalty fees. These royalty fees are typically a set percentage of the franchisee's sales or revenues and serve as compensation for the ongoing use of the franchisor's brand and the benefits that come with it, which might include training, supply chain support, and assistance in setting up operations.