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The main pro of this structure is that it eliminates the ability of the franchisee to rip off the franchisor by not declaring all earnings.

Think off all the mowing franchises that do cash jobs on the side and don’t have to pay a % as there is no record.

On the flipside of that, if the franchisor is getting the same commission regardless, they may not have much motivation to support their franchisees and help them to grow their businesses.