How is the determination of whether any Minimum Royalty payment is due for a 1-800-GOT-JUNK? franchise evaluated?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
If the total of all Royalties actually received by Franchisor from Franchisee for any calendar year (for Royalties rendered in that Subterritory) is less than the Minimum Royalty for that year as set out in Schedule B, then Franchisee shall pay to Franchisor the amount that the Minimum Royalty for that year exceeds the total of all Royalties actually received for that year from that Subterritory. Amounts payable in respect of such difference, if any, shall be payable on or before March 31th of the following year, and shall be paid by the same means as the Royalty is payable under Section 3.4. Whether any Minimum Royalty payment is due is evaluated for each Subterritory separately, and independent of any Royalties paid with respect to other Subterritories. For certainty, the Royalties paid to Franchisor for each and every Subterritory must meet or exceed the amount of the applicable Minimum Royalty for each and every Subterritory each calendar year. Royalties paid in relation to one Subterritory will not be considered or taken into account in any way in determining whether the Minimum Royalty for another Subterritory has been met in a given calendar year.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, the evaluation of whether a Minimum Royalty payment is due is conducted separately for each subterritory that a franchisee operates within. If the total royalties paid for a subterritory are less than the Minimum Royalty specified in Schedule B for that year, the franchisee must pay the difference to 1-800-GOT-JUNK?.
This payment is due by March 31st of the following year and must be paid using the same method as regular royalty payments. The royalties from one subterritory cannot be used to offset any shortfall in another subterritory; each subterritory must independently meet or exceed its Minimum Royalty requirement.
For a prospective 1-800-GOT-JUNK? franchisee, this means that each subterritory within their franchise area is assessed individually for Minimum Royalty obligations. Franchisees need to carefully track the revenue and royalties generated in each subterritory to ensure compliance and avoid additional payments. This policy encourages franchisees to actively develop and manage each subterritory to meet its minimum financial targets.