How are fixed-price royalties determined and recognized by Bananas Smoothies Frozen Yogurt?
Bananas_Smoothies_Frozen_Yogurt Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalties can be earned based on a percentage of franchisee gross revenues or a predetermined fixed fee. Franchise royalties are related entirely to the use of the Company's intellectual property. Royalties are recognized as franchisee sales occur and the royalty is deemed collectible, while fixed priced royalties are determined at the time of the agreement and recognized monthly.
Source: Item 23 — RECEIPT (FDD pages 58–231)
What This Means (2025 FDD)
According to the 2025 FDD, Bananas Smoothies Frozen Yogurt may collect royalties based on either a percentage of gross revenues or a predetermined fixed fee. The document states that fixed-price royalties are determined at the time of the agreement and are recognized monthly. This means that the franchisee will know the exact royalty amount they will be paying each month for the duration of the agreement.
For a prospective Bananas Smoothies Frozen Yogurt franchisee, understanding how royalties are calculated is crucial for financial planning. If the royalty is a fixed fee, the franchisee can budget accordingly, knowing the exact amount due each month. This differs from royalties based on a percentage of gross revenues, which will fluctuate with sales.
The FDD indicates that royalties are related entirely to the use of Bananas Smoothies Frozen Yogurt's intellectual property. This means the royalty payment is for the continued use of the Bananas Smoothies Frozen Yogurt brand, trademarks, and system. Franchisees should ensure they understand all terms and conditions within the franchise agreement regarding royalty payments, including when they are due and any potential penalties for late payment.