Avoid Junk Fees: Franchise Accounting & FTC Rules 2025

Understanding and Navigating “Junk Fee” Regulations in Franchising: What Franchisees and Franchisors Need to Know

If you’re involved in franchising—whether you’re a franchisee or a franchisor—you’ve probably heard about the growing buzz around “junk fees.” These are those unexpected, sometimes hidden charges that pop up and make operating a franchise cost more than you thought. In 2025, the Federal Trade Commission (FTC) has stepped up to protect franchise owners from these surprise fees, making transparency and fairness a top priority. Let’s break down what this means for you and how you can navigate these changes with confidence.

What Exactly Are “Junk Fees”?

Simply put, junk fees are extra charges that franchisors impose but don’t clearly disclose upfront. Think of fees for technology platforms, marketing programs, training sessions, or even property improvements that suddenly appear on your bill.

For a franchisee, these fees can feel like a hidden weight, eating into your profits and complicating your cash flow. For franchisors, these fees might seem like a way to cover costs, but if they’re not transparent, they risk legal trouble and damaging trust with their franchisees.

Why Is the FTC Cracking Down Now?

In recent years, franchisees have spoken out about these surprise fees, and the FTC has listened. Starting in 2024 and continuing into 2025, the FTC has made it clear: franchisors must disclose all fees upfront in the Franchise Disclosure Document (FDD) and franchise agreements. No more sneaky charges after you’ve signed on the dotted line. Plus, the FTC is protecting franchisees from retaliation if they report unfair fees, which is a big win for small business owners trying to protect their investments.

How Does This Affect Your Accounting and Finances?

From where I stand, as someone who works closely with franchise accounting, these junk fees create chaos in your financial planning. When you budget based on what you think your costs will be, unexpected fees throw everything off — your cash flow, your profit margins, and your ability to plan for growth. On the flip side, franchisors who keep their accounting clean and transparent not only avoid headaches but also build stronger, longer-lasting relationships with their franchisees.

What Can Franchisees Do to Protect Themselves?

• Dig Into Your Franchise Disclosure Document: Before you sign anything, make sure you understand every fee listed. If something’s unclear or missing, ask questions. Don’t be shy—your business depends on it.
• Keep a Close Eye on Your Expenses: Track every fee you pay. This way, if something unexpected shows up, you’ll have the records to back up your concerns.
• Get Help From Franchise Accounting Experts: These pros can help you spot hidden fees, understand their impact on your cash flow, and make sure your books are accurate.
• Know Your Rights: Thanks to the FTC’s new rules, you’re protected from undisclosed fees and unfair contract clauses. If you suspect something’s off, you have options.

What About Franchisors?

If you are a franchisor, this is your moment to set the standard for transparency. Make sure all fees are properly stated in your FDD and contracts. Avoid surprise charges, communicate openly with your franchisees, and review your agreements to comply with the latest FTC guidance. Partnering with franchise accounting specialists can help you keep everything aboveboard and running smoothly.

Why Transparency Matters More Than Ever

At the end of the day, franchising is a partnership. When both sides know exactly what to expect financially, it builds trust and sets the stage for success. The FTC’s crackdown on junk fees is pushing the industry toward fairness—and that’s good news for everyone involved.

Book Your Free Profit & Cash Flow Analysis Today

If you’re feeling overwhelmed by fees or just want to make sure your franchise finances are in top shape, QMK Consulting is here to help. Based in New York City and specializing in franchise and restaurant accounting, our team knows the ins and outs of franchise fee structures and financial compliance.

Schedule your Free Profit & Cash Flow Analysis with Mohamed Karmous, our franchise accounting expert and restaurant accounting advisor. Together, we’ll uncover hidden costs, optimize your cash flow, and set you on a path to financial clarity and growth.

Don’t let surprise fees hold you back. Contact QMK Consulting today and secure a strong financial future for your franchise.

Get Your Free Profit & Cash Flow Analysis