For All States M.E.D., what is the franchisee agreeing to regarding the total amount of revenue they will generate?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
ssistance and services to Franchisee as in this Agreement and for costs incurred by Franchisor, including general sales and marketing expenses, training, legal, accounting and other professional fees.
3.2 Monthly Royalty Fee
(a) Franchisee shall pay to Franchisor without offset, credit or deduction of any nature, a monthly fee ("Royalty Fee") equal to 8% of Gross Revenues for the previous month period. The Royalty Fee is due on the tenth (10th) day of each month (for the prior month) and begins on the first (1st) month after the Business is open for operation and continues for the duration the term of this Agreement. The Franchisee will provide to Franchisor a Gross Revenues Report, as required by Section 12.2, for each month during the operation of the Franchise. If Franchisor requires Franchisee to pay Royalty Fees through electronic transfer as in Section 3.4, such reports shall instead be submitted to Franchisor via facsimile transmission, e-mail or intranet system.
3.3 Taxes
Franchisee shall pay its own taxes as related to the Business.
3.4 Electronic Transfer
Franchisor shall require all Royalty Fees, amounts due for purchases by Franchisee from Franchisor and other amounts due to Franchisor to be paid through an Electronic Depository Transfer Account ("EDTA"). At Franchisor's request, Franchisee shall open and maintain an EDTA, and shall provide Franchisor with continuous access to such account for the purpose of receiving any payments due to Franchisor. Franchisee shall make deposits to the account sufficient to cover amounts owed to Franchisor prior to the date such amounts are due. Franchisee shall execute any documents Franchisor's or Franchisee's bank requires to establish and implement the EDTA. Once established, Franchisee shall not close the EDTA without Franchisor's written consent.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, franchisees are obligated to report and remit a percentage of their gross revenues to the franchisor. Specifically, All States M.E.D. requires franchisees to pay a monthly royalty fee of 8% of their gross revenues, without any deductions or offsets. This royalty fee is due on the tenth day of each month, covering the previous month's revenues, and starts from the first month the business is operational, continuing for the entire term of the franchise agreement. Franchisees must also provide a Gross Revenues Report each month.
All States M.E.D. defines "Gross Revenues" as all business revenue which the Franchisee accrues during the operation of the Franchise, but excluding taxes collected from customers and paid to any taxing authority, and reduced by the amount of any documented refunds, credits, allowances, and chargebacks given in good faith to customers. This definition clarifies what income is subject to the royalty fee, excluding pass-through taxes and legitimate customer refunds or credits.
All States M.E.D. mandates that all royalty fees and other payments due to the franchisor be paid through an Electronic Depository Transfer Account (EDTA). Franchisees are required to open and maintain this account, providing All States M.E.D. with continuous access for withdrawals. Franchisees must ensure sufficient funds are available in the EDTA to cover amounts owed to All States M.E.D. before the due date and cannot close the EDTA without the franchisor's written consent. This electronic transfer system ensures timely and consistent payment of royalties and other fees to All States M.E.D.