Royalty – the special term meaning a certain type of payments. The concept of a royalty often meets in publishing house and franchizing though it is sometimes applied also in the state scales.
Meaning of the term
Though historically the word "royalty" meant payments to ruling persons for use of their earth and resources, over time the term found more general meaning. Today are understood as a royalty, generally continuous periodic payments to the owner of a certain property. These payments are made by the subject using this property for extraction of commercial benefit.
Most often royalty pay owners of franchizes. It is known that franchizing is a leasing of a certain business in exchange for periodic assignments which just and are called a royalty. Strictly speaking, even not business, and only the trademark, a logo, corporate style, identification marks and other characteristics allowing buyers to identify unambiguously a brand is leased. The benefit of franchizing is that the businessman receives a ready business model: it does not need to be spent for advertizing, development of business solutions and technological processes.
The producer of sewing machines Isaak Zinger selling the right for repair and service of sewing machines in the USA became the first franchiser.
On the other hand it is connected by the certain demands made by the owner of a franchize (it can be the quality standards, the minimum sales volumes, use of any given equipment). Besides, percent from profit or the fixed sum the buyer of a franchize has to pay it to the owner. This payment is also called a royalty.
Who else pays a royalty?
Also the term of a royalty is actively applied at commercial use of subjects of copyright: books, pieces of music, movies, patents for inventions. Here the royalty are understood as assignments to the copyright owner of some part of profit from realization of each copy or its use for the purpose of obtaining benefit. The royalty is usually paid in addition to royalties.
The royalty differs from the usual rent in the fact that its size directly depends on the profit got with use of a subject of rent.
At last, royalty are paid for the right of mining and other resources. In some states where subsoil and natural resources are considered as the property of the country, the state becomes the recipient of a royalty. In the same cases when subsoil is a private property, the payment for their use is raised by the owner.