What amount did Afuri Ramen Dumpling report for royalties in the provided revenue breakdown?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- 2.2 Royalty Fee.
You will pay to us 5% of your Revenue (as defined in Section 2.6) each month for the preceding month as a "Royalty Fee".
The precise timing and method of payment for the Royalty Fee will be as described in our Operations Manual.
- 2.3 Advertising Fee.
You will pay to us 1% of your total Revenue (as defined in Section 2.6) each month for the preceding month as an "Advertising Fee".
The precise timing and method of payment for the Royalty Fee will be as described in our Operations Manual.
- 2.3.1 Advertising Fee payments are in addition to and exclusive of any sums that you may decide to spend on local advertising and promotion.
We have sole discretion over the creative ideas, materials, endorsements, media, placement, and allocation of monies related to use of the Advertising Fee.
- 2.3.2 You recognize the value of advertising and the importance of the standardization of advertising and promotion to the furtherance of the goodwill and the public image of the Afuri system and the System.
We may use all contributions and any earnings from the Advertising Fees we receive from you in local, regional, national, Internet, or international advertising for:
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, franchisees are required to pay a monthly royalty fee of 5% of their revenue. This royalty fee is a recurring expense that franchisees must factor into their operating costs. The FDD specifies that the precise timing and method of payment for the Royalty Fee will be as described in the Afuri Ramen Dumpling Operations Manual.
In addition to the royalty fee, franchisees must also pay an advertising fee of 1% of their total revenue each month. These advertising fee payments are separate from any local advertising and promotion expenses that the franchisee may choose to spend. Afuri Ramen Dumpling retains sole discretion over the creative ideas, materials, endorsements, media placement, and allocation of monies related to the use of the Advertising Fee.
Furthermore, if a franchisee terminates the agreement outside the terms of Section 6.2, or if Afuri Ramen Dumpling terminates the agreement, the franchisee may be required to pay liquidated damages. These damages are calculated as the amount equal to the Royalty Fees the franchisee should have paid for either 24 months or the number of months remaining on the term of the agreement, whichever is less. This calculation is based on the average Royalty Fees paid during the 12 months preceding the termination date.