{"ok":true,"canonical_url":"https://dealroom.so/glossary/royalty","api_url":"https://dealroom.so/api/public/glossary/royalty","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"royalty","term":"Royalty","group":"Reading the business","definition":"A royalty is a payment made for the ongoing use of an asset, like intellectual property or a brand name, often a percentage of revenue. In an acquisition, it's an ongoing expense that reduces the business's cash flow.","what_it_means":"If the business you're buying is a franchise, you'll almost certainly pay ongoing royalties to the franchisor. These payments are a fixed cost of doing business and must be factored into your financial projections and repayment capacity analysis. Understand the terms of any royalty agreements, as they impact profitability and debt service coverage.","url":"https://dealroom.so/glossary/royalty","official_sources":[],"related":[{"slug":"franchise","term":"Franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","term":"Repayment capacity","url":"https://dealroom.so/glossary/repayment-capacity"}],"related_questions":[]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Royalty","url":"https://dealroom.so/glossary/royalty","source_type":"DealRoom Data"}}