Royalty - GCSE Business Definition

In GCSE Business, a royalty is a payment made to the owner of something, like a book, song, invention, or brand, for the right to use it. This payment is usually a percentage of the money made from selling or using that item. For example, an author gets royalties from a publisher each time their book is sold.

In franchising, franchisees pay royalties to the franchisor (the original business owner) for the right to use their brand name, products, and business model.

Businesses, especially in creative industries and franchises, need to understand royalties because they are both a cost for businesses and a way for owners to make money.