Usually the biggest angst, for the franchisor, in deciding these fees revolves around the franchisee and the on-going royalty. What is the right amount to charge? In the absence of any logical methodology, the company resorts to either copying others in the market or making the decision arbitrarily.
Granted that there is no right or wrong about the fees you charge (as long as the franchisee is willing to pay), it is good to make these important decisions within some framework. More than simply plucking numbers from the sky, determining the initial franchise fee and the on-going royalty is more an art form rather than a science.
See more franchise facts at A-Z Of Franchising!