Under what circumstances will the royalty fee for a 360 Painting franchise be increased?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
- (iii) Franchisee shall execute, at Franchisor's option, Franchisor's then-current form of Franchise Agreement, which Franchise Agreement shall supersede in all respects and may contain terms and conditions substantially different from those set forth herein, including, without limitation: (a) additional fees and/or an increase in any or all Continuing Fees (as such term is hereinafter defined), (b) a change in the size or composition of the Protected Territory, (c) the renewal Franchise Agreement shall only provide for the number of additional renewal terms called for by this Agreement, and (d) mandatory minimum periodic royalty requirements that, in Franchisor's determination, take into account the thencurrent market, the maturity of the Business and its record of Gross Sales during the term;
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, the royalty fee for a 360 Painting franchise can be increased under specific circumstances related to the renewal of the franchise agreement. Specifically, when a franchisee renews their agreement, 360 Painting has the option to require the franchisee to execute the then-current form of the Franchise Agreement. This new agreement may supersede the original and include terms and conditions that are substantially different.
One of the potential changes in the renewed franchise agreement is the possibility of increased fees. This includes the potential for additional fees or an increase in the continuing fees, which would encompass royalty fees. The new agreement may also include mandatory minimum periodic royalty requirements. These requirements would be determined by 360 Painting based on the current market conditions, the maturity of the franchisee's business, and the business's record of gross sales during the term of the original agreement.
For a prospective 360 Painting franchisee, this means that the royalty fees they pay could change upon renewal of their franchise agreement. The increase would not be arbitrary but based on factors like market conditions and the franchisee's business performance. It is important for franchisees to be aware of this potential change and factor it into their long-term financial planning. Franchisees should carefully review the terms of the renewal agreement to understand any changes to the fee structure.