What happens to the minimum monthly royalty paid in a Successor Agreement for Anago franchisees?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
service is provided by You directly or by Your |
| Type of Fee1 | Amount | Due Date2 | Remarks |
|---|---|---|---|
| operation, no minimum b) from the 13th - 24th months of operation, the minimum Royalty Fee is $1,500 per month c) beginning the th month of 24 operation until the termination of this agreement, the monthly minimum Royalty Fee shall increase each 12 months by $1,500 over the prior minimum amount. Any Successor Agreement shall contain a provision for the minimum monthly royalty paid to be no less than the average monthly royalty paid during the last year of this agreement. | Unit Franchises, employees or other contractors, excepting only the amount of any sales taxes that are collected and paid to the taxing authority. Gross Revenues includes the proceeds of any business interruption insurance. Cash refund and credit given to Clients (except credit for missed cleaning days) and receivables uncollectable from Clients will be deducted in computing Gross Revenues to the extent that the cash, credit or receivables represent amounts previously included in Gross Revenues where Royalty Fees and other amounts were paid. Gross Revenues are deemed received by You at the time the goods, products, merchandise or services from which they derive are delivered or rendered or at the time the relevant sale takes place, whichever occurs first. Gross Revenues consisting of property or services (for example, "bartering" or "trade outs") are valued at the prices applicable, at the time the Gross Revenues are received, and to the produc |
Source: Item 6 — OTHER FEES (FDD pages 12–19)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, a Successor Agreement must include a provision ensuring the minimum monthly royalty is no less than the average monthly royalty paid during the last year of the original agreement.
For a prospective Anago franchisee, this means that if they decide to renew their franchise agreement, the minimum royalty they pay will be based on their actual royalty payments from the previous year. This provides a degree of predictability, as the minimum royalty in the new agreement will reflect the franchisee's recent business performance.
This condition in the Successor Agreement protects Anago by ensuring that franchisees continue to contribute at a level commensurate with their established revenue. It also motivates franchisees to maintain or increase their revenue in the final year of their agreement to avoid a high minimum royalty payment in the subsequent agreement. Franchisees should carefully track their royalty payments in the years leading up to renewal to anticipate the terms of their Successor Agreement.