Are the Royalty Fees paid to Auntie Annes refundable?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
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- 4. Recital A: "Approved Products" means hand-rolled soft pretzels prepared in accordance with a unique recipe, specialty products featuring soft pretzel dough, lemonade and other frozen and non-frozen drink products, and other related food products, beverage products, and related services we approve.
- 5. Recital A: The "Primary Mark" is: AUNTIE ANNE'S®
- 6. Section 1.1 (Accepted Location): The Accepted Location means: «location_name», «store_street_address», «store_city», «store_state» «store_zip». [OR] a location to be determined and added to this Agreement located in the following Site Selection Area: _____________________________________________.
- 7. Section 1.4.A. (Owners of Equity): Below is a complete list of your Owners and breakdown of your ownership structure:
- 8. Section 3.1 (Initial Franchise Fee): The Initial Franchise Fee shall be equal to $_______________.
- 9. Section 3.2.A. (Royalty Fee):
[For Cinnabon Co-Branded Shops in Other Locations:] The Royalty Fee shall be (a) 6% of Net Sales that are attributable to products that we and the Co-Branded Franchisor mutually agree, in our and its sole discretion, to credit towards the Cinnabon® side of the Franchised Business (which will be collected by the Co-Branded Franchisor) and (b) 7% of Net Sales that are attributable to products that we and the Co-Branded Franchisor mutually agree, in our and its sole discretion, to credit towards the Auntie Anne's® side of the Franchised Business ("AA Products"), which may be increased by us, in our sole discretion, at any time during the Term up to a maximum of 8% of the Net Sales that are attributable to AA Products (which will be collected by us). The Royalty Fee will be payable each week on the Net Sales of the Franchised Business for the preceding week (or on any other basis stated in the Manuals or in our written notice to you).
[For Cinnabon Co-Branded Shops in Streetside Locations:] The Royalty Fee shall be 6% of the Net Sales of the Franchised Business, payable each week on the Net Sales of the
Franchised Business for the preceding week (or on any other basis stated in the Manuals or in our written notice to you). We and the Co-Branded Franchisor will jointly collect the Royalty Fee from you based on the Net Sales of the entire Co-Branded Franchise.
[For Jamba Co-Branded Shops in Other Locations:] The Royalty Fee shall be (a) 6% of Net Sales that are attributable to products that we and the Co-Branded Franchisor mutually agree, in our and its sole discretion, to credit towards the Jamba® side of the Franchised Business ("Jamba Products"), which may be increased by the Co-Branded Franchisor, in its sole discretion, at any time during the Term up to a maximum of 7% of the Net Sales that are attributable to Jamba Products (which will be collected by the Co-Branded Franchisor) and (b) 7% of Net Sales that are attributable to products that we and the Co-Branded Franchisor mutually agree, in our and its sole discretion, to credit towards the Auntie Anne's® side of the Franchised Business ("AA Products"), which may be increased by us, in our sole discretion, at any time during the Term up to a maximum of 8% of the Net Sales that are attributable to AA Products (which will be collected by us).
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
Based on the 2024 Auntie Anne's Franchise Disclosure Document, the provided excerpts do not contain information regarding the refundability of royalty fees. The excerpts primarily focus on how the royalty fees are calculated and when they are payable, especially for co-branded locations with Cinnabon and Jamba.
Specifically, the document details the royalty fee structure for different types of co-branded Auntie Anne's locations. For instance, in Cinnabon co-branded shops, the royalty fee is split between products attributable to Cinnabon (collected by the Co-Branded Franchisor) and Auntie Anne's products (collected by Auntie Anne's). The fees are a percentage of net sales and payable weekly. Similar structures are described for Jamba co-branded shops, with royalty fees potentially increasing during the term.
Because the FDD excerpts do not specify whether these royalty fees are refundable under any circumstances, prospective franchisees should directly ask Auntie Anne's franchisor about the conditions under which royalty fees might be refunded. This information is crucial for understanding the financial risks and obligations associated with the franchise.